Government signals potential carve-outs for startups and venture capital firms
Finance Minister Jim Chalmers has rejected proposals for the government to index tax brackets as promised by Angus Taylor, warning that the opposition’s tax plan would add more than $250 billion of debt to the budget.
It also sent the strongest signal yet that Labour’s changes to capital gains tax cuts could be withdrawn to provide more relief for start-ups and venture capital firms.
In an interview on ABC insider Appearing on his programme, Chalmers said the Coalition’s plan to index Australia’s tax rates was one of the least responsible plans he had ever seen to tackle time bracket drift, where wages rise over time with inflation, pushing people into a higher tax bracket.
“We’ve been cutting income taxes five times using three different mechanisms, and the last time we cut income taxes Angus Taylor voted against it and said he would repeal it,” he said.
“Angus Taylor will add a quarter trillion dollars to national debt [by indexing the tax rates]“This will cost tens of billions of dollars in extra debt interest because he has a cost-free, false tax proclamation designed to fend off One Nation.”
“There are a number of problems with what Angus Taylor is proposing, but overwhelmingly, this extra quarter of a trillion dollars in debt and tens of billions of dollars in debt interest makes his budget the least responsible response I have ever seen.”
But Taylor rejected modeling published by Labor on Friday which predicted the opposition’s tax proposal would amount to $35bn, not $22.5bn, over four years and up to $250bn within a decade.
“This is their tax increase, the income tax increase they are planning,” Taylor said in an interview with Sky News.
“If Labor wants to shout about the $200 billion in income tax increases they are planning, all of it coming from the private sector, this is a plan to expand government and shrink the private sector forever.”
Chalmers argued that the Labor government had “enthusiastically” returned the extra tax collected on tie-shifting in a more responsible manner than the Coalition, adding that “we have created the space to roll back further tie-shifts into the future” – with future increases in tax write-offs expected.
Regarding the impact of the CGT changes, Chalmers said the government recognized that “startups and venture capital, particularly the tech sector, have a different type of cost-based calculation”.
“It is not unusual for a major tax change to be announced followed by a consultation on implementation, and we have signaled for some time that we are prepared to do this and that has already begun.”
Taylor said the Coalition’s immigration policy would reduce “mass immigration” by at least 70 per cent to below around 200,000 people a year, tying immigration to the number of new homes built.
“I’m not going to release that number until we know how many homes have been built, and we’ll know that in the next little while,” Taylor said.
Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up for our weekly Inside Politics newsletter.
James Massola is the chief political commentator. He was previously national affairs editor and Southeast Asia correspondent. He won the Quill and Kennedy awards and was a Walkley finalist. Connect securely to Signal @jamesmassola.01Connect with: X or email.
