There is a lot of chatter in our main stream media at the moment about potentially removing both the 50% CGT discount and negative gearing. Two of the main tax concessions impacting property investors. Which can mean only one thing. The government is planning on doing it, and is instructing the media to put these stories out on purpose to both gauge sentiment and also convince everyone of the virtues of their policy changes before they implement them.
What you also need to know is these headlines are being juiced on purpose to trigger you. Just like CocaCola when it had cocaine in it to keep you coming back for more by way of chemical addiction.
These policies won’t actually benefit you, even if you are a renter who owns no property.
The reason they are putting out this rage bait and propaganda is because when they’ve whipped you up into a frenzy of indignant rage, you are more likely to believe them hook line and sinker, without questioning any of their erroneous reasoning, and as a direct consequence you are more likely to vote for them, even though doing so is to your detriment.
What’s wrong with their reasoning? Lets explain
Imagine taxpayers are like people on the Titanic when it sank. Headlines like this imply that everybody will just continue doing what they were beforehand, sipping their cocktails like nothing is happening, and sink all the way to the bottom of the ocean with the ship, copping their larger taxes on the chin.
What they fail to explain is that this is the exact opposite of what happens in reality.
When changes like this are even so much as suggested, there is a veritable stampede to alter course by all those with the most to lose. They engage their accountants and lawyers and change their affairs to minimise the damage BEFORE the changes take place. They get themselves ready, and brace for impact. When governments follow through and enact new tax legislation, all the remaining impacted taxpayers then storm for the lifeboats.
- Those paying the most attention will already be at the lifeboats, safe and sound.
- There will also be a few who were, by sheer luck, standing next to them too, inadvertently safe as well
- Then there will be everyone else, pushing and shoving and fighting for survival, some will make it, others will not
- There are those who were not paying any attention at all, who never stood a chance and will sink like stones.
- And lastly there is the captain who will go down stoically with the ship
These headlines imply all tax payers are like that stoic captain, who’ll just suck it up, keep doing exactly what they were doing before and wear these larger taxes like a badge of honour
But in reality, people like this are as few and far between as the captain on the titanic. A ratio of 1 in 2,200
There is no missing money bag the government can just tap into
The government is not missing out on $250 Billion dollars in lost revenue as a result of the 50% CGT discount. And making the changes the government is proposing will not raise anywhere close to $250 Billion in revenue, it will be far, far less.
Likewise the negative gearing tax concession is the government's way of subsidising the rental market, and keeping the rent you pay low. When this tax concession is removed, landlords will simply raise their rents by the amount the tax concession grants them. Just look to any other rental market in the world where this concession does not exist (the UK, and most of Europe) in every single one of them renters pay a significantly higher price, based on the costs of owning property than we do in Australia
Property investors are running businesses, and businesses need to either make money or they cease to exist. When you significantly increase the costs of running these businesses by making tax changes, they either raise their prices to account for this or close up shop and stop providing those services to society.
We do not operate in a vacuum, and landlords will alter their behaviour as a direct result of these tax changes.
So next time you read a headline like this, know it is purposefully meant to mislead you, and to trigger you in a way that benefits the government and disadvantages you. Once you have the ability to see it you stop being a pawn in their game and become your own player, with agency, who can make up their own mind, make their own decisions, who can see both the forest and the trees.
