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20 April 2004

Property Taxes

Remember the promises about the GST?

Some thoughts arising from your excellent article.

Last week Peter Costello made comments on Sydney radio, reported again in The Age, that negative gearing and capital gains tax legislation “will not change”.

It was only 18 months between Mr Howard categorically stating that “there will never be a GST”, until his Government introduced the GST.

These property taxation laws form the basis of the Western world’s easiest tax haven – no need for Swiss bank accounts for the average Australian (we’ll leave that for cigar-smoking dressing-gown wearing share-market pamphleteers).

Peter Costello first “categorically” ruled out changes to negative gearing and capital gains approximately 5 months ago. So that’s between 7 – 13 months to go.

So with a federal election in perhaps 4 – 6 months, all we would need to see is a suitable trigger in autumn next year for the Federal Government to back flip once again. All bets are off if perchance, Mark Latham and Simon Crean find themselves in charge of the country’s purse strings.

But what trigger? Unemployment is falling, GDP is growing, inflation is low, China can’t get enough of our resources, business confidence is up and the Australian dollar is… Oh yeah, the dollar…

Alan Kohler of The Age and ABC recently pointed out that CPI inflation is artificially low in Australia at the moment because of the strong Aussie dollar (a.k.a. the weak US dollar). Without this hedge discount on imported goods, inflation could be running at twice its current level.

Goodness knows what the Reserve Bank and the pollies would do if the much anticipated US economic recovery occurs and the US dollar strengthens.

The property revolution may still be some time in bringing relief for first-home buyers, and may come from unexpected quarters.


This comment refers to the article, THE COMING PROPERTY REVOLUTION

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