Dear Col Rouge,

"Thus as you say, the net differemce was about zero, in terms of ATO GCT receipts."

Dream on.

Within four years the proportion of total tax revenue represtented by Capital Gains Tax receipts went from nearly 4% to 2%. Or in real terms $5.3 billion in 1999-2000 to $3.2 billion in 2002-03.

Next you will be telling me it is right that people can negatively gear expenses at 47.5% but only pay tax at half that rate on the profits.

Dear Yabby,

From my reading it was Howard who asked his mate Ralph to investigate CGT and whether reducing it to 30% would help in the efficiency of its application. Ralph went with a submission from the Stock Exchange that had hired Reaganite Alan Reynolds who claimed for every 1% drop in tax rate the return would be 1.7% increase in transactions.

Howard goes 'Yipee' so goes even better than the initially mooted 30% and drops the rate to 24.5% for the high income earners.

The result, drops in both transactions and revenue.

But he was warned by many eg,
“Clearly the new CGT regime is inequitable and unjust and is an invitation to the kind of rorting that the Ralph Review was designed to stamp out.” Ivor Ries, financial journalist, Australian Financial Review 1999

So I'm still sticking with a scam.

Csteele “Next you will be telling me it is right that people can negatively gear expenses at 47.5% but only pay tax at half that rate on the profits.”

Yes

I would remind you, the rules for determining “profit” are exactly the same for housing investment as it is for any other form of investment, be it a share investment or small business, that the costs of borrowing (setup and interest) are allowed for (deducted) before the assessable income is determined.

What you claim as the “anomaly” of negative gearing is not an anomaly at all but is the standard accounting principle as applied to all and every investment and has been “adopted” for use by the tax office.

I would also refer you to Yabby’s comment regarding the millions of houses which are exempt from CGT because they are owner-occupied. I suppose your sensitivity to that “scam” too and think all should pay.

Of course, under the Howard government, tax revenues increased beyond expenditure and surpluses prevailed.

However, today we are heading back into negative government budgeting, in the name of a myth, the socialist government vomiting billions of dollars onto an overheated building sector in the name of the God “dimulous”.

Yes, building school halls from where future generations can pray to the great “Dimulous” and talk the mantra of Krudd and the sacred swill humpers. Forgetting that school halls have zero value to productivity or any future benefit (since they are seriously underutilized at the best of times).

Finally, regarding your comments people on the top rate gaining a benefit whilst those at the bottom get nothing….

when you pay no tax, there is no benefit but when you pay heaps of tax you benefit by paying less but still pay a lot more than those who pay nothing.

I blame them at the bottom, for not earning more taxable income.

“So I'm still sticking with a scam.”

If you think the standard accounting practice, as adopted and ratified by accountants across nations is a “scam” then you are clearly either misinformed or misguided.

Dear Col Rouge,

Still dreaming it would appear.

Standard accounting practice?

Standard business practice dictates that if an arm of your (the ATO) business is costing you double what your making from it then it is time to make some changes.

Lets just focus on real estate.

Deductions from individual property investors was $11.7 billion in 07-08 which was over twice the $5.2 billion in taxable capital gains reported by them.

Lets assume most of them are in the top income bracket then 48% of $11.7 billion foregone in revenue to make 24% of $5.2 billion.

Scam.

I think the Henry tax review will recommend CGT be payable on properties over $2 million, Rudd specifically asked him to look at this.

Gets no objections from me.