PREDICTIONS OF THE IMPACT OF NEGATIVE GEARING REQUIRE FURTHER WORK

Posted 7 March 2016 2:09pm

Empirical evidence suggests that real estate investment is likely to be sensitive to tax incentives. A significant policy shift on negative gearing is likely to induce a strong behavioural response, changing the equilibrium in a range of markets including the housing market, the capital market and potentially the labour market. The additional amount of tax revenue collected will be determined by the responsiveness of the taxpayer to these policy changes and can be affected by multiple means.  Without serious modelling of the investment behaviours of the taxpayers associated with negative gearing, it is not possible to draw a robust, evidence-based conclusion on its budgetary impact.

 

For further details contact Dr Jinjing Li at: Jinjing.Li@canberra.edu.au

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