Tax breaks for property investors have delivered a far greater boon to speculators than previously thought, gouging billions from tax revenues with the benefits going overwhelmingly to the rich.
The 2002-03 Taxation Statistics show capital gains tax revenue plunged from $5.3 billion to $3.3 billion in three years following radical changes to the system in 1999. The changes were touted as revenue neutral at the time.
The Tax Office figures, published on Friday, also show the national negative gearing gap between rental tax deductions and rental income more than doubled in just one year.
The figures show it is now far more tax-effective to buy and sell assets than earn a salary, as investors receive generous tax breaks from rental losses and further tax breaks when they sell.
The capital gains tax changes announced by the Treasurer, Peter Costello, in September 1999 - against Treasury's advice - gave individuals a 50 per cent tax discount on assets sold after being held for more than one year.
The changes were a "grossly unfair give-away to the rich" and had shifted the tax burden from property owners to salary earners, said Professor Chris Evans, director of the ATAX tax school at the University of NSW.
Landlords and speculators reap billions from tax rule changes - Business - www.smh.com.au