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Property Tax issue raises a raft of questions

WITH regard to the column “Tax doesn’t help build a solid future for Australia” by Joe Poprzecny (Business News, October 4-10)

While I would like to declare total opposition to Labor’s broken election promise in the form of the new Premium (envy) Property Tax, one should severely question imposing capital gains tax on the family home (as proposed by Joe Poprzecny) as a solution to this issue.

It is unfortunate that the prominent location of the large mansions in Perth attracts undue attention but, in reality, they only comprise a very small percentage of our total housing stock.

Joe is correct to call for a review of the taxation treatment of superannuation, and without doubt a lot more work needs to be done to ensure that Australia gains more national and strategic benefit from our retirement savings policy.

Some Western countries do impose capital gains tax on the family home but, as a general rule, only where home mortgage payments are tax deductible.

One could argue that Australia has a better model, with no tax deductible mortgage payments and no resultant capital gains tax.

However, the introduction of a capital gains tax on the family home in Australia could have some unexpected outcomes.

Studies conducted recently indicate that, within a few years, there is a real danger that only 50 per cent of homes in Australia will be owner occupied.

While on the surface this may be of little consequence to some, ownership of the family home may carry serious defence ramifications.

In his memoirs, Lee Kuan Yew was deeply affected by the quick takeover and occupation of Singapore by the Japanese during WWII. Before the war, few residents owned their homes in Singapore and they had little incentive to defend the assets of wealthy landlords.

As a consequence, after the war he developed a home ownership policy that would ensure the young men in the Singapore army would stay and fight to defend their families’ homes and assets in the event of any future attack.

Hence, increasing the percentage of those who own their home is a serious issue for this country. While I do not oppose gearing property, any further revenue-raising measures that would reduce the attractiveness of owning the family home needs close scrutiny.

Maybe we should have a complete overhaul of our obsolete centralist taxing and spending model and move to one that encourages substantial personal saving. The result would be more personal resources to pay for own retirement, health and educational needs.

Then we would not fall captive to the deplorable “Dutch Auction” over health and education funding that we witnessed at the previous State election.

Steve Blizard

Rivervale

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