The Treasury has released modelling indicating that 90% of young Australians will be better off under the Albanese government's proposed tax reforms. Treasury secretary Jenny Wilkinson presented the data at an Australian Business Economists lunch in Sydney, detailing the combined effects of a $1,000 automatic tax deduction, a $250 'working Australians tax offset' (Wato), and changes to capital gains tax (CGT) and negative gearing.
Modelling Details
Wilkinson stated that the cumulative impact of the reforms would benefit around 90% of young people before considering housing market effects. Had these changes been implemented from 2000, approximately 90% of Australians under 30 today would have been better off financially. The modelling considered total lifetime income, showing that those in the top 10% of lifetime earnings would be worse off by age 30 under the new system.
Investor Demographics
Reserve Bank research revealed that people under 40 made up 35% of property investors in 2000, dropping to about 20% by 2023. Conversely, investors over 60 increased from 12% to 28% in the same period. Tax office data indicates that about one in ten Australians under 35 own shares.
Critics argue that some young people with significant share investments may face higher taxes. Wilkinson acknowledged this trade-off but noted that post-tax profits remain intact. She also dismissed claims that the reforms could harm productivity, citing OECD research that finds no clear evidence supporting favorable CGT treatment for investment beyond inflation adjustment.
Political Reactions
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,' while the Nationals demanded an early election. A recent poll suggests the Coalition could be reduced to 12 lower house seats, with One Nation surging and Labor retaining government.
Labor faces internal tension over potential CGT carveouts for small businesses. Treasurer Jim Chalmers appears reluctant to alter the budget proposal significantly, but some Labor MPs seek to reduce the impact on businesses. The government's CGT changes will be examined by a short Senate inquiry, reporting by 22 June, with Labor aiming to pass the first budget bills before the winter break in early July.
Albanese stated that consultation with business groups continues, but the fundamentals of the reforms remain intact. He emphasized the importance of maintaining system integrity and avoiding new loopholes.
