This article is more than 4 years old

This article is more than 4 years old

The budget cost of tax breaks on family homes has reached nearly $55bn a year, fuelling debate about alternative options as the Turnbull government prepares its election-year tax package.

New figures published by the Treasury on Friday suggest the total amount of revenue foregone as a result of exempting main residences from capital gains tax is about 20% higher than it was two years ago.

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The increase has been attributed to higher-than-expected property prices driving up the value of the concession.

The annual “tax expenditures statement” also shows superannuation tax breaks – a key target for Labor savings proposals – are relatively stable but sizeable. They include $16.3bn lost from the concessional treatment of employers’ contributions and $13.6bn from the concessional treatment of earnings.

The Coalition government is working on a tax package that could include an increase in the rate and broadening of the base of the goods and services tax, and it is also open to changes to superannuation tax concessions that currently favour high-income earners.

But Malcolm Turnbull said on Friday he did not want to increase the overall tax take as a share of the economy, restricting the prime minister’s options for returning the budget to surplus.

Taxes on the family home are likely to be seen as too politically difficult for either main party to touch, especially in an election year, even as the costs mount.

People who sell their main residence are fully exempt from capital gains tax, while those who sell other assets such as investment properties are entitled to a 50% discount.

The $54.5bn figure for the 2015-16 financial year is total revenue foregone in relation to main residences, compared with if the full capital gains tax was charged.

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For measurement purposes, Treasury breaks this down into two portions – $30bn attributed to the 50% discount component that would otherwise be available and a $24.5bn “top up” bringing the discount to 100%.

The cost of the discount is smaller but still significant for homes that are not the owners’ main residence. Treasury estimates that a further $6.2bn in revenue will be foregone this year as a result of the 50% discount on capital gains made by individuals or trusts where the asset has been owned for at least 12 months.

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Treasury also quantifies the cost of carve-outs from the base of the GST, including fresh food ($6.8bn), education ($4.2bn) and health services ($3.7bn).

The report canvasses 290 “tax expenditures”, which include tax exemptions, deductions or offsets, concessional tax rates and deferrals of tax liability.

While the document is intended to help inform public debate about the tax system, it includes a warning that the figures should be interpreted with caution. This is partly because the foregone revenue figures assume taxpayer behaviour would remain the same if the concession was removed.

The treasurer, Scott Morrison, has repeatedly called for a focus on cutting spending rather than increasing taxes, while the Labor opposition has argued the budget solution should involve a mix of revenue and saving options.

The budget update in December showed the overall tax take would be 22.8% of gross domestic product this financial year, rising to 23.6% by 2018-19. Total revenue as a share of GDP would rise from 24.3% to 25.8% over the same period.