Treasury modelling shows that 90% of young Australians would be better off under the Albanese government's proposed tax reforms, which include a $1,000 automatic tax deduction, a $250 'working Australians tax offset' (Wato), and changes to capital gains tax (CGT) and negative gearing. Treasury secretary Jenny Wilkinson presented the previously unreleased data at an Australian Business Economists lunch in Sydney.
Wilkinson said the cumulative impact of the reforms would benefit around 90% of young people before accounting for housing market effects. She added that if the changes had been in place since 2000, approximately 90% of Australians under 30 today would be in a stronger financial position. However, those in the top 10% of lifetime earnings would have been worse off by age 30 under the new system.
The government introduced the tax changes to parliament on Thursday amid heated debate. Opposition leader Angus Taylor called Prime Minister Anthony Albanese an 'arrogant prick' during question time, while the Nationals demanded an early election. Reserve Bank research released Thursday showed that property investors under 40 fell from 35% in 2000 to 20% in 2023, while those over 60 rose from 12% to 28%.
Critics argue that some young people with significant share investments may pay more tax. Wilkinson acknowledged trade-offs but said post-tax profits would still be enjoyed. She also pushed back against claims the reforms could worsen productivity, citing OECD research that found no clear evidence supporting favourable CGT treatment beyond inflation compensation.
Internal Labor tensions exist over potential CGT carveouts for small businesses, following backlash from employers. Treasurer Jim Chalmers appears reluctant to alter the budget proposal, but some Labor MPs seek to reduce the impact on businesses. The CGT changes will face a Senate inquiry reporting by 22 June, with Labor aiming to pass the first budget bills before parliament's winter break in early July.
Prime Minister Albanese did not rule out changes but stressed the need to maintain tax system integrity and avoid creating new loopholes. Nationals leader Matt Canavan called for an early election, despite a Redbridge Group and Accent Research poll suggesting the Coalition could be reduced to 12 lower house seats from 43 if an election were held today.
