Population has quickly turned against Budget measures
Advocacy group says government has done a bad job in selling their tax changes to the Australian people.
The Labor Government’s Federal Budget measures have backfired and people are “tearing it apart”.
That’s the view of Tom Forrest, chief executive of property advocacy group Urban Taskforce.
“The very people that the Budget was supposed to appeal to are burning it down with memes, humour and, in some cases, vitriol and anger,” Forrest said.
So, what happened?
“The pre-Budget leaks had tilled the soil for change. The case was mounted for change to the Howard era concessions on negative gearing and capital gains tax,” Forrest said.
“Urban Taskforce was concerned about this, but focused our attention on preserving the CGT concession of 50 per cent for newly built property as well as allowing the existing negative gearing arrangements for those new builds.
“As long as those newly built properties were held by the original buyer, the status quo on those taxes would remain.
“In a unanticipated change, the Budget also spread the tax changes to include a minimum tax of 30 per cent on all payments to the beneficiaries of discretionary trusts.
“There is mass confusion over the taxation treatment of unit trusts and the interaction between those trusts and the company taxation arrangements. It appears that unit trusts are exempt from the changes – but the messaging is, at best, poor.”
Forrest said all this has had the effect of stopping investment decisions.
“If a property financier was looking to create a tax effective capital stack to support new housing right now, they would not know where to start.”
Forrest said the Government appears to have completely under-estimated the political impact of broken promises.
“The pre-election promises not to make any changes on negative gearing or capital gains tax were very clear,” he said.
“For a large cohort of Australian voters, their mistrust of Labor on tax promises is long-standing and has been re-ignited by this Budget.
“In contrast, John Howard broke his promise not to introduce a GST, but he took his revised position to the 1998 election … and won.
“The prime minister’s abject incapacity to explain why the changes were being applied to start-ups and small businesses, even with a hand-picked social influencer interviewer, saw the credibility of this Budget immediately fade.”
But Forrest said the real concern for treasurer Jim Chalmers and the Albanese Government is the quantum shift in mood. The Government has been branded anti-innovation.
“For those that see Labor as being akin to socialists, this Budget, and the painting of it as anti-innovation, anti-tech, anti-small business, anti-youth, re-enforces their view. Worse, the Government has been hopeless at explaining the Budget,” Forrest added.
“The ‘fact sheets’ are not consistent with the Budget detail, which are in turn, inconsistent with the public statements of the PM and treasurer, which are in turn, inconsistent with each other.”
The Urban Taskforce was happy to back the grandfathering of existing arrangements for negative gearing and CGT for new dwellings.
“But the sales job on this Budget has been really bad and the taxation burden has either been badly miscalculated or the economic commentariat has got it wrong.
“Either way, Albanese and Chalmers have a lot of work to do to overcome this self-inflicted wound,” Forrest said.
