Negative geared investors lose $13 billion The figures identify negative gearing as one of the key drains on personal tax collections. Photo: Jessica Shapiro Negatively geared property investors lost an astonishing $13.2 billion in 2010-11, up from $10.1 billion the year before. The latest Tax Office statistics show the average loss per negatively geared investor was $10,950, up from $9130 the year before. The average loss for a high-income negatively geared investor earning more than $180,000 was $23,800. Higher interest rates and rising property prices during 2010-11 swelled the losses. The figures identify negative gearing as one of the key drains on personal tax collections with one in every seven Australian taxpayers now a property investor and one in every 10 negatively geared. The 2010 Henry Tax Review declined to recommend against the practice - its chairman Ken Henry telling a press conference as he was preparing the report that he "still wears the scars" from an earlier short-lived experiment with limiting negative gearing in the 1980s. "I actually think Henry was incredibly wussy about it," Bank of America economist Saul Eslake said on Tuesday. I have to translate the words 'negative gearing' to people overseas because it just sounds crazy to have a system that rewards people for losing money. Removing it would be close to the top of my agenda. I have a list of what I regard as the worst tax decisions of the last 20 years. One is the halving of the headline rate of capital gains tax [in 1999] that made negative gearing attractive. The others are the abandonment of indexation of petrol excise, the senior Australian tax offset - the measure that says if you are over 65 you pay less tax on a given amount of income than if you are under 65 - and the abolition of income tax on super fund earnings paid to people over 60. They would be my contenders for the dumbest tax decisions of the last 20 years. Frankly, I can't choose between them. The tax statistics released Tuesday also identify fuel tax credits as by far the most expensive offset in the tax system, costing $5.1 billion in 2010-11 and $5.5 billion in 2011-12, way in excess of the next biggest contenders, the Education Tax Refund which cost $700 million and the research and development tax offset which cost $614 million. The credits are for fuel used in heavy vehicles and are overwhelmingly used in the mining industry. "The argument for it is that the purpose of fuel excise was to pay for roads, and that mining companies get a rebate because they don't use their vehicles on public roads," Mr Eslake said. I guess there is some merit in that argument, although in my view not enough merit to justify $5.5 billion of revenue forgone. The tax statistics identify residents of Darling Point, Edgecliff, Rushcutters Bay and Point Piper in Sydney as Australia's highest earners, taking home an average taxable income of $203,270 each. Australia's second and third highest earning postcodes are 3944 and 3142 - taking in Portsea on the Mornington Peninsula and suburban Toorak and Hawksburn. The average income for each is around $180,000. Only 251,400 Australians earned $180,000 or more in 2010-11, enough to put them into the top tax bracket. The bracket took in 2.7 per cent of all taxpayers. The average male income during 2011-11 was $63,000. The average female income was $42,150.