Marginal change': Keating lashes Coalition, John Howard and startup sector over CGT claims

Labor’s capital gains tax reforms are presented as marginal changes that will not undermine entrepreneurship. The reforms are framed as necessary to improve housing affordability by addressing distortions created by earlier preferential tax treatment for wealthy investors. The 50% capital gains tax discount introduced by the Liberals is linked to sharply higher house prices, with house prices described as rising from nine times average household income to 16 times. Keating argues that the tax system has favored capital over wages for decades, disadvantaging wage earners. Proposed changes replace the 50% discount with cost-base indexation so profits are taxed after inflation, and impose a minimum 30% tax rate, which some tech founders oppose.

"Paul Keating has rubbished claims from the Coalition and the startup sector that Labor's reforms to capital gains tax will undermine entrepreneurship, insisting the changes are marginal and badly needed to improve housing affordability. Amid a week-long assault on Jim Chalmers' budget, the former Labor prime minister said wealthy individuals had been the beneficiaries of preferential treatment for investments for decades rules he said had distorted the tax system and disadvantaged wage earners."

"Lashing John Howard and Peter Costello for introducing the 50% capital gains tax discount and dramatically fuelling house prices in Australia, Keating said the Liberals had helped used car selling and dodgy accounting mates. Changes introduced in 1999 had seen house prices increase from nine times the average household income to 16 times' the income. Wealthy people are out there now arguing against the government's change notwithstanding the stark evidence of the price shock Howard and Costello induced, Keating said in a blistering statement."

"And they want to split off startup capital and shares as if the individuals commentating have not made a feast of it already. They want to retain a preference for capital over wage and salary income. The proposed CGT changes replacing the 50% tax discount on profits with a new cost-base indexation model, meaning tax on profits after inflation, and a minimum 30% tax rate imposed have been strongly opposed by some tech founders."

"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. The simple fact is that income is taxed too heavily while capital is taxed too lightly. That is the fact of it"

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