Wild claims circulating after the federal budget about dramatic rent increases and new 'death taxes' have been debunked by economists, The Conversation analysis shows.
The usual budget scare campaign is in full swing. Worth cutting through the noise to explain what Labor's actually proposing versus what the opposition and property lobby are claiming. Australians deserve facts, not fear.
Claim One: Landlords Will Hike Rents
Critics claim that limiting negative gearing to new builds will force landlords to raise rents to offset their higher tax bills. Economists say that's nonsense. As one analyst put it: "If your landlord received a tax cut, would you expect them to pass that cut through to your rent?"
Landlords already charge whatever the market allows. Reserve Bank research found investors could only raise rents by 3 cents per dollar of increased borrowing costs. Grattan Institute analysis suggests the reforms would increase rents by just $1 weekly for median rentals—Treasury estimates around $2 weekly.
Properties purchased before the budget announcement can continue negative gearing, further reducing cost pressures. The rent apocalypse scenario just doesn't hold up under scrutiny.
Claim Two: Trust Tax Changes Are a 'Death Tax'
Opponents characterize the 30% minimum tax on discretionary trust income as a 'death tax' affecting inheritance planning. This is misleading scaremongering.
The reforms only apply to new testamentary trusts—approximately 10,500 compared to 800,000+ other discretionary trusts. Critically, the tax targets trust income, not asset transfers into trusts. Beneficiaries face the same 30% rate as middle-income earners earning $45,000-$135,000 annually—hardly unprecedented taxation.
