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Category: Federal Government / Business, Economics and Finance

Costello argues against changes to negative gearing

Thursday, 3 Mar 2016 03:49:44 | Louise Yaxley

Future Fund chairman Peter Costello speaks during the Senate finance estimates hearing at Parliament House in Canberra on November 20, 2014. (AAP: Alan Porritt, file photo)

Former Treasurer Peter Costello has weighed into the economic debate raging inside the Coalition, arguing against changes to negative gearing and calling for more spending restraint.

Mr Costello was one of the special guests at a dinner in Parliament House last night to mark the 20th anniversary of John Howard's Government being elected in 1996.

The anniversary celebration comes amid a debate in the current Government over tax and spending policy.

Mr Costello said as he arrived in Parliament's Great Hall he believes negative gearing rules should be left alone.

"When I was treasurer we looked at all of these things and the basic principle of the tax law is this — if you have an expenditure, a necessary expenditure, incurred in the course of producing income that expenditure is deductible," he said.

Mr Costello argued that had always been the principle.

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"Expenditures are deductible against income that is the basic principle of our tax law," he said.

"I am no longer writing the policy, but I was convinced my view was a good one at the time."

He also called for the Government to do more to cut spending.

"Well I do think it is important that we get expenditures under control," Mr Costello said.

"If we could get expenditures as a proportion of the economy back to where they were before Kevin Rudd was elected, the budget would be in surplus now.

"That was emergency funding and we are still spending at emergency levels eight years after that event."

Earlier this week, former prime minister Tony Abbott spoke out in the Coalition party room warning against any changes to negative gearing and encouraging the Government to cut spending not lift taxes.

That was seen as a challenge to the Prime Minister and the Treasurer who are working on a tax policy and who won't rule out changes to negative gearing.

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