2016-02-18
Wealthy WA investors use negative gearing more, and gain more of the benefits, than any other state in Australia. These benefits flow to the rich in WA even more than they do in other parts of the country.
This has contributed to an overheated, unaffordable housing market here in WA. First home buyers are priced out of the market altogether, or forced to buy in the outer reaches of Perth's urban sprawl.
WA investors use negative gearing more than the national average:
- More Western Australians per capita negatively gear (6.5%) than the national average (5.4%)
- Of the population of Western Australian taxpayers, 11.3% negatively gear, the national average is below 10%
- Nationwide, 15% of the total tax benefit of negative gearing goes to investors living in WA, even though WA is only 11% of Australia's population
- Western Australians are more likely to negatively gear than people with the same income in other states. That difference is higher still for people earning above $160000/year
- Western Australians claim a greater average loss ($10,725) than the national average ($9802), meaning they offset their tax by more
- During the WA property boom period of 2006 - 2011, this loss was higher still, around $13,000 on average
The inequities of negative gearing are also felt hardest in WA. With a higher rate of negative gearing, and more of that negative gearing being exploited by wealthier investors, the impact on new home buyers is highest in WA.
- 60% of the benefit of negative gearing in WA goes to taxpayers in the top 10% of taxable incomes. For the rest of the country, 49% of the benefit of negative gearing flows to the richest 10%
- Negative gearing is more prevalent amongst high income earners in WA; people earning more than $80000/year make up 46% of negative gearers in Western Australia. Only 35% of negative gearers in NSW and 29% in Victoria earn more than $80000/year
- Similarly, high income earners in Western Australia more likely to negatively gear than high income earners in NSW and Victoria; of people earning between $180000/year and $190000/year, just 18% of them in NSW negatively gear, but 27% of them in Western Australia do.
Economics journalist Peter Martin wrote more about the losses from negative gearing in Western Australia here;
http://www.theage.com.au/federal-politics/political-news/negative-gearin...