John Howard has put forward a low-tax deposit savings account pledge to assist first-home buyers as part of the Coalitions' election bounty. The $1.56 billion plan is similar to the $600m pledge of Kevin Rudds.
Under the Coalition's scheme, two forms of saving account will be available:
1) Adult first-home buyers will be able to make contributions of up to $10,000 per year into a home deposit saving account. The first $1000 deposited each year is claimable as a tax deduction and interest earned on sums in the account are tax free.
2) Adults will be able to make a total contribution of up to $1000 per year towards the first-home purchase of a family member or friend below the age of 18. The contributions are tax deductible or, for people with no taxable income, subject to a 15% cash rebate.
Additionally, Howard has also promised to exempt first homes purchased in shared equity arrangements between the occupant and a contributing family member from capital gains tax.
If you're trying to work out which party's offer is the most generous, here's what the Housing Industry Association’s Chris Lamont had to say:
“Tax concessions under the Coalition policy appears more generous than what’s offered by Labor,” Lamont says. “But Labor has more of a focus on balancing the needs of home owners with the rental market, so overall they are both very good policies.”
The reality, however, is that neither policy is likely to improve housing affordability, despite the multi-million dollar tax concessions involved. What is being promoted is creating a culture of saving.
Thus, whilst the housing affordability crisis will not be solved by such policies, it would appear that both parties are listening to the concerns of Australians. Simon Turner
Read Marquette Turner's account of Labor's policy.
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