Younger investors, many of whom entered the market during the pandemic, are recalibrating their strategies in response to new tax changes. However, despite the immediate impact, the real issue remains housing supply.
Personal Experience with Housing Affordability
Intifar Chowdhury, a youth researcher and lecturer at Flinders University, shares her story of buying a first home through stock market gains. She notes that a steady salary was insufficient to secure housing, highlighting a deeper problem.
Tax Changes and Their Impact
The federal budget proposes reducing the capital gains tax discount, meaning more profits from investment sales will be taxed. While this affects those who rely on shares to build wealth, it is part of a broader effort to address intergenerational equity.
Former treasurer Peter Costello argues the changes punish young people trying to build wealth. However, the budget also aims to balance the tax system between work and wealth, which has historically favored asset owners.
Generational Inequity
Young Australians face slower wage growth, higher income taxes, and rising public debt. The budget's reforms attempt to shift some of the load, but critics say they may not go far enough.
Housing Supply Remains Key
Housing is both a supply and tax problem. Until more homes are built, tax changes will have limited impact. The budget's ambition on supply is constrained, and deeper reforms are needed.
Alternative Solutions
Ideas outside the package include income tax cuts for workers, replacing stamp duty, and taxing windfall profits in sectors like gas exports. Doing nothing is not an option, as previous settings rewarded wealth over work.
The real tension lies in who bears the cost. Older asset holders are largely protected by grandfathering, while younger Australians feel the shift more acutely.
