Former prime minister Paul Keating has strongly defended Labor's proposed reforms to capital gains tax (CGT), dismissing claims from the Coalition and startup sector that the changes will undermine entrepreneurship. He described the reforms as "marginal" and essential for improving housing affordability in Australia.
Keating's Blistering Attack on Coalition
In a statement, Keating lambasted former Liberal leaders John Howard and Peter Costello for introducing the 50% CGT discount in 1999, which he said dramatically fueled house prices. He accused the Liberals of helping "used car selling and dodgy accounting mates" and noted that house prices have risen from nine times the average household income to 16 times since the change.
Keating argued that wealthy individuals have benefited from preferential tax treatment for decades, distorting the tax system and disadvantaging wage earners. "Wealthy people are out there now arguing against the government's change notwithstanding the stark evidence of the price shock Howard and Costello induced," he said.
Defense Against Startup Criticism
The proposed CGT changes would replace the 50% tax discount on profits with a cost-base indexation model, taxing profits after inflation, and impose a minimum 30% tax rate. Some tech founders, including those from Canva, have strongly opposed the changes, warning they could stifle innovation. However, Keating dismissed these concerns, saying successful startups would not be deterred by "marginal" tax changes.
"Punters with a big idea won't be put off by some marginal change to the tax rate. The rush of entrepreneurial blood to the brain always dominates," Keating said. He emphasized that income is taxed too heavily while capital is taxed too lightly, a distortion that has made housing unaffordable for a generation.
Government's Struggles and Opposition
Prime Minister Anthony Albanese has blamed misinformation and dishonesty for the backlash against the reforms. He stated that the government aims to tax income from work and assets more equally. Treasurer Jim Chalmers has stressed ongoing consultation with the tech sector but has given no firm indication of changes.
Shadow treasurer Tim Wilson warned that Labor would kill the startup sector, calling the budget an abuse of trust. Opposition leader Angus Taylor has pledged to oppose the measures and repeal them if the Coalition wins the next election. NSW Premier Chris Minns criticized the government for not returning bracket creep profits to taxpayers, noting that high-income earners work half the week for the taxman.
Labor may try to pass the budget legislation before the winter parliamentary break in July to avoid a parliamentary inquiry and a well-funded campaign against the measures.
