The proposed GST hike will manage housing affordability, a major housing lobby has argued.
The Housing Industry Association (HIA) is supporting Prime Minister Malcolm’s Turnbull’s hesitation over a proposed GST increase, saying it would be a “big blow” to Australia’s housing market and housing affordability.
“The government is right to be apprehensive about increasing the GST on new housing, which would be a big blow to one of the bright lights of our post mining boom economy,” HIA chief executive industry policy and media, Graham Wolfe said.
“Modelling conducted by the housing industry shows that an increase in the GST by another 5% would add around $30,000 to the price of an indicative house and land package, and over $60,000 over the life of a loan in principal and interest repayments.”
According to Wolfe, new housing is already one of the most heavily taxed sectors of the Australian economy, with the tax burden on a new house and land package up to 44% of the final price.
“Adding another 5% on top of the price of a new home will put housing out of reach of many people that are trying desperately to get into the market, and would really put the brakes on an industry that is driving the economy in a number of states and territories.
“The Prime Minister has rightly questioned whether raising the GST to reform taxation elsewhere will provide net positive benefits to the economy. Increasing the GST on new housing will cost jobs and reduce housing affordability, putting both firmly on the negative side of the ledger.”
However, Wolfe says broader tax reform should be high on the agenda, saying the housing association will welcome a “comprehensive tax reform debate”.