Reintroducing inheritance taxes would be an efficient and equitable way to address housing affordability, according to University of Queensland researchers.
Australian Institute for Business and Economics Director Professor John Mangan said housing affordability was a national concern and a potential barrier to equality of opportunity.
“Inheritance taxes present an opportunity to capture a portion of this tax and apply it directly to address housing affordability, reducing less equitable or efficient forms of tax, and or funding expenditure – such as education – aimed at improving equality of opportunity,” Professor Mangan said.
He said the rate of household home ownership for 25- to 34-year-olds fell from 60 per cent in 1981 to 45 per cent in 2016.
Professor Mangan said average wealth by age had rapidly shifted towards older households.
“A significant factor in the growing wealth of older Australians has been due to the effects of ownership of property and inflation of property prices, with rising house prices and falling home ownership rates among young households,” he said.
“If housing affordability concerns persist, inheritance of property can further drive wealth disparity.”
The research report, led by Professor Mangan, Jeffrey Lin and Filip Milosavljevic, identified a slowing of the transfer of wealth between generations in Australia.
“These changes have significant implications for welfare across generations, and contribute to the issue of equality of opportunity within Australia,” Professor Mangan said.
“By redistributing a portion of inheritance taxes to issues like housing affordability, we allow more people to enter the housing market without the benefit of inheriting a home or money from their parents, creating more equal opportunity.”
