PM personally stepped in on negative gearing, as Taylor pledges ‘generational’ tax plan
Prime Minister Anthony Albanese has personally insisted on protecting existing negative-gear investors; While opponents promise voters a “tax refund guarantee”, critics say the change will consolidate the wealth of asset owners.
Questions from the opposition, including from many cabinet ministers, about provisions allowing landlords to continue to negatively impact properties they already own sparked anger in parliament on Thursday.
Albanese, dubbed Pinocchio by the Coalition for breaking promises, was forced to retract his own comments after calling a backbencher a “moron” in a row over his properties.
The day before, Albanese had warned Taylor in a one-on-one meeting in parliament that personal and family arrangements should be banned and Labor could flip the script on Taylor’s trusts and fortune. When the opposition returned to the line of questioning, a heated argument broke out between the two.
During questions on Thursday, Albanese sidestepped questions about whether Labor would consider inheritance tax and warned Taylor that he was on borrowed time, saying: “The clock is ticking.”
The barbs came hours before Taylor’s budget response speech, in which the opposition leader promised to peg the bottom two tax brackets to inflation from 2028; For the average taxpayer, $250 would be paid in the first year and $1,000 in the fourth year. The opposition did not say how the expensive tax cut would be financed in the budget, especially given Taylor said he would cancel Labor’s $100 billion tax increase on investor franchises and trusts.
The indexing was confirmed by Labor frontbencher Bill Kelty in an interview with this imprint on Thursday, before Taylor’s offer was made public. Kelty said Treasurer Jim Chalmers’ $250-a-year Working Australians Tax Cut announced in Tuesday’s budget was “small”.
Still, Kelty welcomed Labour’s policy as a positive step that opens the door to “real reform” to solve “the fundamental problem of the tax system, which is that the tax system is not indexed to employees”.
Chalmers rejected indexation and supported the expansion of the tax offset introduced in Tuesday’s budget.
Labor and the Treasury have weighed in on negative gearing options that would be less generous to existing holders, according to government sources with expertise in policy development. But despite mixed views, Albanese was adamant the changes would not affect the around 50 per cent of property investors who already deduct rental losses from their income.
“Every one of these police officers, teachers, firefighters, whoever they are, can keep their current arrangements in place,” Albanese said during question time. He added that the current tax system was “destroying young Australians”.
Albanese and his ministers have reveled in the public outcry over Labor reneging on its election promise to keep property concessions intact, which the opposition described as a brazen lie.
The Prime Minister held a series of FM radio interviews on Thursday and ministers were surprised by the callers’ lack of hostility towards him. Labor Party polling also shows that many voters are in favor of the changes, but reactions have been mixed and entrepreneurs, including Seek founder Paul Bassat, are leading a campaign against what they describe as a stifling tax policy.
Speaking in his budget response, Taylor said the prime minister had taken advantage of negative gearing and was now “letting young Australians out” and “moving up the ladder of opportunity”.
Taylor’s speech contains more policy announcements than a normal budget response speech, especially so early in the term and three months into his leadership, as the new Coalition leader makes big claims about progress following Farrer’s by-election defeat by One Nation.
Shadow ministers were not included in most of the changes.
“The coalition has a lot of work to do to earn your trust,” Taylor said, according to an advance copy of his speech. “But I hope that with the policies I announced tonight and the vision I outlined, you can begin to believe again.”
The opposition, which is unlikely to win the next election according to current polls, is also promising to increase tax revenues based on increases in commodity prices. The savings will be transferred to the “Future Generations Fund”.
After Labor announced a permanent $20,000 instant asset write-off for businesses, Taylor said he would offer up to $50,000.
Taylor was blocked last term from using a version of the Tax Rebate Guarantee designed by Peter Dutton to ensure income tax brackets rise each year in line with inflation. In its new commitment, the coalition will apply indexation to high-income earners starting from 2031, after targeting a large portion of voters in the lower and middle tax brackets.
“This will completely protect all taxpayers from inflation,” Taylor said. “This is tax reform for generations.”
Taylor will also announce that the Coalition will make Australian citizenship a condition for receiving welfare payments.
Leading economists Chris Richardson and Saul Eslake said they were against grandfathering in principle. But Richardson said this appeared to be “the political cost of getting change passed.”
Eslake said grandfathering means “privileging people based on birth order,” but noted that negatively oriented estates will eventually be phased out in about eight years. The government believed that a clean historical allocation was the cleanest approach to avoid shifting goalposts and distortions.
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Paul Sakkal is the Chief Political Correspondent. He has previously covered Victorian politics and won the Walkley award as well as the 2025 Press Gallery Journalist of the Year award. Contact him securely on Signal @paulsakkal.14.Connect with: X or email.
