David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Hansard source

In a way, the legislation before us today converts our income tax into a turnover tax and our capital gains tax into a wealth tax. It is also set to extract about $800 million extra from taxpayers over the next four years. It's the Treasury Laws Amendment (Housing Tax Integrity) Bill 2017. As the name suggests, the government is moving towards a turnover tax and a wealth tax for those individuals who do the reprehensible act of investing in housing. Under standard income tax rules, travel to and from a residential property investment that is owned for the purpose of generating assessable income is deductible. But it won't be once this bill passes. By denying deductions, this bill is effectively making people pay tax on their turnover instead of their income. Turnover taxes are a terrible idea, even worse than income taxation, but the government is going ahead regardless.

Travel costs to generate assessable income may also form part of the cost base of the residential property investment under standard capital gains tax rules. This ensures that capital gains tax is on the gains, not the entire value of the capital. But once this bill passes it will no longer be possible to include these travel costs in the cost base, so for the affected people capital gains tax will move more towards a tax on the entire capital—in other words, a wealth tax. Wealth taxes are a terrible idea, even worse than capital gains taxation, but the government is going ahead regardless. But wait, there's more. Under standard income tax rules the decline in the value of previously used depreciating assets used to earn assessable income is deductible, but, under this bill, if you are earning assessable income by investing in residential property, you will now be denied these deductions. This is a further step away from income taxation towards a turnover tax. All of this will shift investment away from residential property, and rents will go up as a result. This is pure folly. The government's willingness to remove standard tax features just to attack individual investors in residential property begs the question: what is stopping the government from going completely anti investment and completely anti rental housing and scrapping negative gearing for investment in residential property?

This bill demonstrates, once again, that the coalition and Labor are cut from the same cloth, and the small policy differences they maintain are mostly for show. In any case, housing affordability is a state issue. Labor or Liberal, the Commonwealth government should not be pretending it has any role to play.

Before I finish, don't let me forget that this teeming chamber of reasoned debate and insight is also debating a second bill, the Foreign Acquisitions and Takeovers Fees Imposition Amendment (Vacancy Fees) Bill 2017. This bill introduces a tax on foreign owners of residential real estate whenever the property is not occupied or genuinely available for rent for six months in a year. It is an example of government micromanagement and intrusion—telling property owners what do with the property they own. Protection of property rights is the most important function of any government. Yet, here we have this government seriously eroding them. Even worse, much of the revenue generated from this new tax will be eaten up by the cost of administering the tax. With nonsense policies like this we're on the road to Venezuela, getting closer with each sitting day of parliament. I condemn these bills to this near empty chamber.