Stephen Kirchner argues that the capital gains tax is hindering investment in Australia.

The burden of capital gains tax is heavier for Australians on high incomes than for investors just about anywhere in the world (with the exception of Sweden and Indonesia). Many countries, including New Zealand, Singapore and Hong Kong, do not tax capital gains.

Stephen Kirchner, a Research Fellow for the Economics Program at the Centre for Independent Studies (CIS), describes Capital Gains as Australia’s most misunderstood tax. In a chapter in the CIS book, Taxploitation II, he suggests a low flat rate of tax for all income from investment will encourage more investment.

In this edition of BTalk he says capitalgains tax is an inefficient way of raising revenue that was first introduced as a means of curbing tax avoidance. At the time the top rate of tax was 60 percent and it kicked in at around $80,000 in today’s money — no wonder people were looking for loopholes.

We talk about Stephen Kirchner’s proposal in this edition of BTalk. I ask whether the tax could be inflating house prices — are we putting more into the family home as the only tax free investment for our retirement? Could this be inflating house prices?

First published on CBS News