Well, we all know the election is coming when a war of words starts between the government and the Labor Party over tax policy. The major parties sparred over the crucial findings of the Organisation for Economic Co-operation and Development’s (OECD) assessment of the country’s current risky real estate sector.
Paris-based OECD, one of the world’s largest and reliable source of statistical, economic, and social data stated that Australian authorities will need to prepare for a housing market drop-induced blow to the economy that might endanger a few of the nation’s significant banks.
House values in Sydney have fallen by 9.6% since their latest peak as well as Melbourne where values have slipped by 5.8%. Some private sector analysts have predicted falls of approximately 20%.
The OECD stated that further falls would lead consumers to wind back their spending which in turn would have a negative impact on the broader economy. This would, therefore, put major banks in the country who are more exposed to the home loan market under severe pressure.
Treasurer Josh Frydenberg used the findings to attack the Australian Labor Party and its proposed overhaul of negative gearing and capital gains tax. He expressed that the OECD’s housing market warning about the economic impact of a sharp decline in the housing market would occur under a Bill Shorten government.
“Labor’s housing tax policies will do just this. They will damage Australia’s housing market and destroy the equity that people hold in their homes, increasing the risk of financial instability and lower economic growth,” according to Mr Frydenberg,
He added, “Australia cannot risk a return to Labor’s high tax and reckless spend approach.”
Shadow treasurer Chris Bowen, however, agrees with the OECD’s call for a tax reform agenda and argued that Labor was the only party going to the election with a plan to decrease tax concessions in the hope of strengthening the country’s budget plan.
According to Mr Bowen, Labor is “tackling the unsustainable and unfair tax concessions in our system, seeking a mandate for important tax reforms, as the Liberal-National Morrison Government simply engages in silly scare campaigns.”
This article first appeared on theage.com.au.
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