Just ten of the wealthiest electorates in Australia capture a third of the benefit of the capital gains tax (CGT) discount which costs the country about $20 billion a year, new ACOSS analysis shows.
The top five electorates – all in Sydney and Melbourne – capture 22% of all CGT discount expenditure nationally, while the bottom 10 electorates receive just 1.6%. Wentworth in Sydney's east receives the highest CGT discount benefit of around $1.76 billion, around 7.5% of all CGT discount expenditure nationally.
There is a 40-fold difference in the CGT discount benefit between Wentworth, the country's wealthiest electorate, and one of its most financially stretched (Blaxland in Western Sydney).
ACOSS's analysis of all 150 federal electorates shows the stark inequality within cities and across the country, with the CGT discount benefit flowing overwhelmingly to capital cities and mostly to eastern states.
"It's clear this tax break funnels billions into the wealthiest parts of our country at the expense of those doing it tough," said ACOSS CEO Dr Cassandra Goldie.
"This is money that could be invested in social housing, essential services, income support and the communities that need support the most. Instead, it's being used to supercharge inequality. That is not a fair or sensible use of public funds."
"When a policy so clearly supercharges inequality while driving up home prices, it simply must be in the national interest for urgent reform."
According to the ACOSS analysis of ATO, Treasury and ABS data, the average annual capital gains tax break for the population in Sydney is $2,402, and $1,647 in Melbourne, while in Darwin people receive an average CGT concession of just $522 per year. NSW receives four times the average CGT discount per person than the Northern Territory, and more than twice that of Tasmania and South Australia.
People in Wentworth, where the average taxable income is $162,561, receive an average capital gains tax break of $13,450 per year. Meanwhile, the population in Blaxland in Western Sydney, where the average taxable income is $53,542, receives an average CGT concession of just $333.
Read the ACOSS briefing note: The unfair distribution of the CGT discount by electorate. View the interactive map here.
ACOSS is calling on the Federal Government to:
- Halve the 50% CGT discount progressively over 5 years
- End negative gearing immediately for new investments, and phase it out over 5 years for existing investments
- Invest the savings in essential supports and services, including social housing and income support
