More coverage of Robert Carling’s paper on capital gains tax

The Centre for Independent Studies, a conservative think tank, this week published a paper that said changes to the CGT discount would be “pointless and damaging” – that it would not improve housing affordability and instead risk investment, productivity and economic growth.

“Studies suggest that reducing the CGT discount would have only a small effect on housing prices while potentially increasing rents,” a statement read. “Any price impact would be minor compared with more significant drivers of housing costs such as land-use regulation, planning constraints and population growth. Reducing the discount could … discourage investment.”

But senior research fellow at the right-leaning Centre for Independent Studies, Robert Carling, warned that mooted changes to CGT would achieve little.

Carling said that while advocates for reducing the discount argued it would have a measurable impact on house prices, the evidence was scant while proposals to cut or even abolish the discount would drive up the tax rate on any given transaction by between 34 per cent and 100 per cent.

“Capital gains tax is frequently portrayed as a simple lever that can fix housing affordability, inequality and the budget all at once. But the economic reality is far more complex,” he said.

“Investment, innovation and risk-taking are essential to productivity growth. Increasing the tax burden on capital gains would work in the opposite direction.”

Criticism has emerged from experts regarding the potential effectiveness of the proposed changes to the capital gains tax. Robert Carling, a senior research fellow at the right-leaning Centre for Independent Studies, highlighted that while advocates for reducing the capital gains tax discount suggest it could help with housing affordability and budgeting, actual evidence supporting this is limited. He cautioned that increasing the tax burden on capital gains could ultimately stifle investment, innovation, and economic growth.