Anthony Albanese and Jim Chalmers are pushing full steam ahead with capital gains tax changes despite widespread backlash from business, start-up founders, and key Labor figures.
The changes could become law within weeks after the Greens cleared the way for the Senate to examine the legislation later in June.
But the Opposition has vowed to fight to the very last vote, calling for an election over what it’s dubbed the “toxic taxes” and working up plans to force Labor to vote against amendments to include larger tax breaks in the bill.
The Treasurer described the legislation he introduced to the lower house on Thursday as the “first step” in an ambitious tax reform package.
“This is a bill for workers, for first home buyers, and for future generations,” Dr Chalmers said.
“This bill presents a choice, a choice between cutting income taxes for Australian workers or keeping them higher.
“Most of all, this legislation is about cutting taxes for workers. It’s about making it easier to buy a first home.”
Under the plans, the 50 per cent discount on capital gains tax will be replaced with an inflation-based discount, with a 30 per cent minimum payable on the taxable portion starting from July 2027.
Negative gearing on investment properties will be limited to newly built homes, although anyone who used the tax break before May 12 will be allowed to keep it.
“Labor has refused to be honest with Australians about its plan for new toxic taxes, a lie that the government hid from Australians at the last election. Why doesn’t the Prime Minister have the courage to take his toxic taxes to the next election?” Opposition Leader Angus Taylor opened a fiery Question Time.
Nine Coalition backbenchers had papers with large letters on their desks, spelling out ‘LABOR LIES’, visible from the heights of the press gallery but not allowed to be photographed due to restrictions on what media can capture in the chamber.
“I will not have signs held up like that for the dignity of this house,” Speaker Milton Dick told the offending MPs once he became aware of what was going on.
Nationals leader Matt Canavan has also demanded an immediate election.
Dr Chalmers described this as “chirping away” and said he didn’t think the Coalition really wanted an election now, in reference to continued polling showing One Nation would win most of their seats.
“We’ve heard a bit of chat in recent days about the formation of a new minor party in our politics... The most efficient way to create a minor party in Australia is to put (Mr Taylor) in charge of a major one,” he said.
Mr Taylor later sought to suspend Question Time proceedings to instead have a debate condemning the Government for “arrogantly misleading Australians about the Government’s plans for toxic taxes … (and) not having the courage to take their toxic taxes to the Australian people at an election”.
The Government were “betraying the hardest working Australians who are willing to take risks and who have made the biggest sacrifices, and hurting Australians without any understanding of who will be punished and to what extent Australians will be worse off,” Mr Taylor said.
However, he didn’t get to make a longer speech to that effect, because he and deputy Liberal leader in the House of Representatives Andrew Hastie messed up the procedure and accidentally curtailed their chance to speak.
Mr Albanese and Mr Taylor traded personal jibes throughout the rowdy session.
The Opposition Leader labelled the PM an “arrogant prick” after Mr Albanese said that for some Coalition MPs, “this might be the last chance they have to vote on income tax reductions”.
“You know what you know what the people on this side have to say in the Labor caucus? What they say to me is how proud they are that we are fighting for values that matter, that we are not prepared to leave the next generation behind, and to say it would be easier to just stay still and leave it for someone else to fix the problem,” Mr Albanese later said.
“If those opposite got out more and spoke upon, they would know that people in their electorates are saying the housing system is broken, that we need to fix it.”
The Greens aren’t closing the door to getting the bill passed before politicians flee Canberra for the winter break on July 2.
But the minor party won’t be waving it through either, despite agreeing to stick with Labor’s planned short three-week inquiry..
Economics spokesman Nick McKim said the bill was a missed opportunity and that the “extremely generous grandparenting provisions” left a lot of money on the table.
“We will use this inquiry to examine how and why Labor decided to leave in place the vast majority of tax handouts for the ultra wealthy,” he said.
Deputy Liberal leader Jane Hume labelled the short inquiry time outrageous.
“They’re ramming through these changes to capital gains tax and negative gearing with their coalition partners, the Greens, without the appropriate scrutiny,” she said.
The Government is also setting up a new $250 annual working Australians tax offset (WATO) and a $1000 standard deduction.
Dr Chalmers has previously said the WATO establishes a new architecture that could be used for more tax cuts targeted at people earning wages – hinting at but not yet promising further relief from income taxes close to the next election.
The Coalition is working through what parliamentary tactics it can use to try and increase the tax cuts on offer now, in a “double wedge” bid to force the Government to vote against higher relief for workers.
The capital gains tax changes have proven the most controversial because they cover all asset classes, not just housing as was anticipated before the Budget.
Labor MPs say a flood of AI-generated memes incorrectly claiming the changes amount to Mr Albanese taking a 47 per cent stake in start-ups have prove “sticky” in people’s minds and are behind the poor reception to the Budget.
Business groups have warned it will stifle investment and are urging the Government to significantly narrow the CGT changes so they’re limited to property investments only.
Ai Group chief executive Innes Willox called the proposals misguided and said they would hit businesses of all sizes and types in their current form.
“They fail to countenance how they will impact on industry, with businesses struggling to understand how they will work, who will be impacted and how they will achieve their stated objectives,” he said.
His comments come a day after the head of the Australian Chamber of Commerce and Industry labelled the tax plans “all stick and no carrot”.
But parts of the broader business advocacy network are showing signs they could splinter depending on where the government lands with carve-outs.
Small business advocates COSBOA have asked for the thresholds for existing CGT concessions to be lifted from $2 million turnover to $10 million, in line with the tax office definition of small business.
The National Farmers Federation joined this call on Thursday, as did independent MP Nicolette Boele.
The Government appears open to both this change and ensuring there is some special arrangement for low-capital, high-growth businesses like start-ups.
But it doesn’t want to significantly narrow its plans.
“People will put forward ideas, but the fundamentals will stay there, the integrity of the system will stay there, and what we don’t want to do is to shut down some loopholes and create others,” Mr Albanese said when asked directly about the suggestions.
WA Premier Roger Cook has also raised concerns about the impact on fast-growing companies like small exploratory miners and made it clear on Thursday he won’t let up on the Prime Minister.
“Our message to the Commonwealth government is, we do not want to disincentivise exploration in our mining industry, nor do we want to disincentivise foreign investment in our large-scale projects, which are essential for bringing these mega projects to life, and we will continue to talk to the Commonwealth government about that now,” he said.
Any carveouts will be dealt with in subsequent legislation later in the year.
The government is keen to steer debate back onto the housing affordability aspect, which has landed far better with the public once they get past the small business complaints.
Housing Minister Clare O’Neil outlined progress on building more homes at the National Press Club, while also saying Australia needed to build higher density cities and stop looking down on faster construction methods such as pre-fab.
She and Dr Chalmers have asked the Productivity Commission to spend the next year looking at how to speed up building new housing in Australia, with an interim report due in July then a final one next March.
Ms O’Neil said the work so far had “picked off the lowest hanging fruit in red tape and regulation” and the PC inquiry will have chart the next reforms.
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