Treasurer Jim Chalmers has described his proposed tax reforms as “contentious” but a step in the right direction for young Australians struggling to break into the housing market.
In Tuesday night’s budget, Mr Chalmers and Anthony Albanese broke a pre-election promise not to touch tax breaks by axing the 50 per cent capital gains tax discount in favour of inflation indexation across all asset classes.
Investors will be given a one-year grace period before the pre-1999 regime kicks in.
New investors will no longer be able to negatively gear properties from July next year, unless the property is a new build.
Mr Chalmers conceded Labor had “come to a different view” on its tax policies after being grilled on the Prime Minister’s broken promise in his post-budget media rounds on Wednesday morning.
“One of the main reasons why we came to a different view in some of these contentious areas is because we want to level the playing field,” Mr Chalmers told the ABC.
“We want to make sure – and we will make sure – that more first-home buyers can get a toehold in the market.
“The way that the housing market and the tax system has interacted has locked too many people out.”
Asked if the changes could perpetuate wealth inequality by preventing young Australians from building wealth in the future, Mr Chalmers said: “Overwhelmingly, this tax package is forward-looking rather than retrospective.”
“Negatively geared properties eventually become positively geared. There’s an element of phasing out automatically,” he said.
“People can continue to negatively gear a new property.
“That’s because we want to make sure that, where these tax breaks are made available, people are making a contribution to this major challenge that we have with housing supply.”
Death tax claims
Prime Minister Anthony Albanese was asked on Today why he did not take negative gearing changes to an election as Bill Shorten did in 2019, losing what was dubbed the ‘Un-losable election’.
Host Sarah Abo asked: “Why have you chosen to lie to Australians instead of letting them vote on it?”
Mr Albanese said: “What we’ve done is putting in place measures whilst grandfathering existing arrangements.
“But addition to that, what we’ve done is to take every single dollar across the forward estimates that will come from any changes to tax and we’re delivering them back.”
He was later quizzed on whether the government would introduce a death tax, and ruled it out.
But Abo asked: “But things change don’t they?”
Mr Albanese replied: “We are saying we’ve changed our position and why we have changed our position.
“And we have changed our position because we don’t want a generation of people who watch your program to be sitting there and thinking going to be renting for the rest of their lives, and by doing it as well, we’re still allowing negative gearing just for new properties.”
More to come
