Huge call on push for more tax changes

Tanya Plibersek and Barnaby Joyce clashed over tax policy. Picture: Supplied.

Jim Chalmers has brushed off suggestions Labor is considering touching the contentious negative gearing scheme, amid reports of growing internal support to revisit the policy.

Backbenchers and unions alike have voiced their concern that negative gearing – which allows investors to deduct losses incurred on investment properties, such as from interest rates and maintenance and therefore reduces the overall tax bill – overwhelmingly benefits property investors and leaves would-be first home buyers struggling to break into the housing market.

But there are broad concerns touching the policy - which Labor took to the 2019 “unlosable” election - would be unwise right now, after the Albanese government last week broke its promise not to touch stage three tax cuts. Prime Minister Anthony Albanese announced his intention to amend the Morrison-era tax cuts, in order to provide substantial tax breaks for low- and middle-income earners, by halving the benefit the country’s highest earners were due to start receiving in July.

In a press conference, the Treasurer denied Labor was looking to revisit its old policy on negative gearing, saying: “We’re not contemplating or considering resurrecting the policies that we took to the 2019 election”.

Treasurer Jim Chalmers said the government is not considering touching investment property tax concessions. Picture: NCA NewsWire / Martin Ollman

“Our focus when it comes to tax and housing has been on incentivising people to rent properties with the tax breaks that were budgeted for in the May budget,” he said.

“We haven’t changed our view.”

Pressed on why Australians should believe him, given just a week ago the government had been touting similar lines in relation to stage three tax cuts, Dr Chalmers said the two policies were completely different.

“We’ve made it really clear that (touching negative gearing) is not something that we have considered or are considering,” he said.

Former Labor leader Bill Shorten took to the 2019 “unlosable” election a promise to significantly wind back negative gearing, and after Mr Albanese took over the reins the party formally dumped the plan to limit tax concessions on new properties.

Housing group Everybody’s Home last week released a report that found the government could fund 500,000 affordable homes if it scrapped negative gearing and other tax concessions for property investors.

Earlier, Barnaby Joyce and Tanya Plibersek tussled over Labor’s stage three tax cuts overhaul and the threats of a looming internal fight on negative gearing.

Barnaby Joyce and Tanya Plibersek in a playful mood on Sunrise. Picture: Supplied.

When asked about the issue on Monday, the Environment Minister denied the claims, instead moving to defend the Albanese government’s recent overhaul of its stage 3 tax cuts package.

“Well, we’ve had no discussions about this (negative gearing). The tax change we’re focused on is the one that we’re taking to the parliament – where every single Australian taxpayer will get a tax cut and millions will get a larger tax cut than they would have under the previous proposal,” Ms Plibersek told Sunrise.

Mr Joyce accused the minister of claiming the media was lying and “making it up”.

2024 Australian Open - Day 15
Anthony Albanese has flagged he would look at more cost relief in the May budget. Picture: Cameron Spencer/Getty Images.

“Backbenchers were talking about it and she’s got to realise ladies and gentlemen when the Labor Party says something, it means nothing,” Mr Joyce said.

“They do not keep promises. It doesn’t matter how you justify it later on.”

Ms Plibersek argued that Mr Joyce failed to deliver a single budget surplus under his former government.

“They never delivered a single surplus. We are about delivering tax cuts to more Australians,” she said.

“And you promised prices would go down, but they have gone up by 12 per cent,” Mr Joyce interrupted

“And you voted against energy bill relief,” the minister fired back.

Jacqui Lambie urged the Liberals to strike a deal with Labor. Picture: NCA NewsWire / Martin Ollman

Mr Albanese will soon kick off negotiations with senate crossbenchers whose support he will need to push his updated tax plan through parliament after it resumes on February 6.

Under Mr Albanese’s reworked changes, the lowest tax bracket would be reduced from 19 per cent to 16 per cent for earnings under $45,000.

The 45 per cent tax bracket will now kick in for those earning more than $190,000, down from the planned $200,000.

Speaking to Sky on Sunday, Mr Albanese ruled out further reducing tax cuts for high earners in discussions with the crossbench.

“We are putting our plan to the parliament, and we are hopeful of getting support,” he said.

“And what we’ll also do … I’ll be in regional Australia and in cities in the coming week. We’ll argue our case. It’s a good case.”

Independent senator Jacqui Lambie told Sky News the Liberals should negotiate with Labor ahead of a looming standoff with the Greens, who have signalled a fight over greater support for low and middle-income earners.

“If I was the Liberals I’d smarten up here and do a deal with the Labor Party to knock the Greens clean out and say OK this is far enough,” Ms Lambie said.

The crossbencher confirmed that she would “absolutely” vote with the government on its new plan.

“I actually would have gone harder on those people with money,” she said.

“I don’t mind not getting a tax cut myself … I don’t need a tax cut, I can afford my groceries, I have a roof over my head.”