Labor and Coalition clash over property investor taxes and income tax cuts
Rival tax plans have drawn new battle lines ahead of the next election, as the coalition wages war against Labour’s property investor tax rises and plans an automatic ongoing cut to income tax to rival Jim Chalmers’ plan to expand the new tax offset.
Prime Minister Anthony Albanese spent Wednesday defending his decision to break election promises and roll back tax cuts on negative gearing, capital gains and trusts; This move will generate approximately $100 billion in revenue in 10 years.
Angus Taylor will try to revive his shares on Thursday night and outline an alternative to One Nation in his budget response speech; This speech will include a well-marked proposal to accept only as many immigrants as new homes are built.
The under-pressure opposition leader is considering a tax pledge that could include pegging marginal tax rates to inflation or wage increases to reduce bracket drift, as reported earlier this week.
Several shadow ministers spoke on Wednesday of the need to return to bracket creep. Taylor was still weighing indexation with colleagues, and final decisions were due to be made on Thursday.
The treasurer has ruled out indexing future tax cuts, ignoring repeated questions about broken promises and acknowledging that his economic agenda is contentious. He argued that extending the new $250 Working Australians Tax Cut could provide relief closer to the next election in 2028.
Sources familiar with Labor’s plans said the offset could be increased and targeted at middle-income workers, similar to the U.S. earned income tax credit.
This offset gives the government “another piece of architecture” to provide occasional tax breaks when affordable, Chalmers said.
“If we want to very specifically target future tax cuts for working people, we have the architecture to do that,” he said in a speech that also sought to deflect critics’ claims that he was going after wealthier Boomers.
“This is a new development in our tax system. This is real reform. What it does is effectively removes the tax-free threshold for people who work for a living.”
Promising bold policy to reward workers, Taylor said “mass immigration” – a term the shadow treasurer refused to endorse on Sunday – was putting pressure on “rents, house prices and every young Australian trying to get ahead”.
Under Taylor’s plan, the then housing minister would report on the number of houses completed. Next year’s transition targets will then be determined to match. Taylor’s policy paper suggested immigration would fall by a further 400,000 people since Labor took office, from 1.8 million to 1.4 million.
Chalmers suggested that linking the housing market to immigration was an offensive “dog whistle”.
Opposition sources acknowledged that more than one person lives in each house and so equating completions with the net emigration rate could go beyond what is needed in any given year. But the aim is to severely restrict certain classes of visas in the near term to ease the housing shortage as quickly as possible, before relaxing controls in later years.
Taylor and his shadow ministers have vowed to fight Labour’s overhaul of negative gearing, capital gains taxes and the use of trusts to split income. They have implied that they would repeal the policies in the unlikely scenario of the opposition winning the next election, but that doing so would create a $100 billion black hole over 10-year budget forecasts.
Shadow treasurer Tim Wilson said: “We will repeal these measures if necessary.”
“It won’t get more Australians to buy their first home, but it will put new taxes on the aspirations and dreams of young Australians looking to get ahead.”
Indexing tax brackets is expensive, but the policy will be welcomed by pro-reform experts and may be worth the cost for the opposition looking to restore its economic bona fides.
Chalmers’s extra taxes on capital gains have revived the traditional row between the Coalition and Labor over taxes and demands and given new energy to a pessimistic opposition as government MPs talk about social justice after years of being accused of being too timid.
Albanese said Taylor would repeat the mistake Peter Dutton made before the last election and vow to cancel new tax cuts, despite the opposition leader having indicated he would support tax cuts while fighting property tax rises.
“These geniuses will go to the election saying they will repeal young Australians’ right to a fair vote,” Albanese said.
The Prime Minister was defiant during question time when asked if he was depriving young people of the investment rules he used to build wealth and buy multiple investment properties.
“I had the opportunity to own a home, and I did that in my 20s,” Albanese told a raucous parliamentary session. “And I did it because my mother, who lived in public housing, told me: ‘When you get a chance in life, own your own house.’
“It’s an aspiration that’s instilled in working-class people, in working-class people who want the next generation to be better off than they were. I’m proud that I worked hard. I’m proud of what I’ve accomplished.”
Albanese and Taylor had exchanged heated exchanges when the Prime Minister sat down after completing his reply, a sign of renewed tensions over policy and personal attacks in the wake of Labour’s boldest ever budget.
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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.
