‘Structurally sound’: Keating backs budget
Former prime minister and treasurer Paul Keating has defended tax changes in the federal budget, with a Labor prime minister saying workers still pay too much.
Mr Keating said the capital gains tax changes in the budget were “structurally sound” despite concerns from business owners that it could deter investment.
The Albanian government’s fifth budget replaces a 50 percent discount on capital gains that has been retained for more than a year with an inflation-based rate.
Real earnings will be taxed at a minimum rate of 30 percent, raising concerns for businesses and startups.
Mr Keating dismissed concerns that the changes would negatively affect businesses in the process, saying these changes were necessary to make housing more affordable.
In his statement, he said, “Bettors with a big idea will not give up on a marginal change in the tax rate. The rush of entrepreneurial blood to the brain is always dominant.”
“The point is that a society that cannot host its children is a society in decline; that is what Jim Chalmers and his Prime Minister are trying to arrest.”
Mr Keating, who served as treasurer as part of the Hawke government, said the capital gains tax he introduced in 1985 was to address distortions in the system.
“This brought the taxation of income and capital into parity for the first time in our history,” he said.
“But in the face of this success, a few wiseguys like John Howard and Peter Costello thought they could do their used car sales and dodgy accounting friends a favor by giving them a 50 per cent tax cut on capital profits.”
The 50 per cent capital gains tax cut was introduced by the Howard government in 1999.
National senator Bridget McKenzie said the former prime minister’s defense showed the government’s budget sale to the public was not going well.
He told Nine’s Today program on Thursday: “You know something is wrong when you have to sack Paul Keating to protect your budget. A lot has changed in the quarter of a century since you were in charge of the Treasury, Mr Keating.”
“What you see from the response to this budget is that Australians are working hard every day to get ahead, you feel like (Treasurer Jim) Chalmers is coming after them.”
It comes after NSW Labor Premier Chris Minns said the federal government needed to take more action to address tax rates, including cutting the top tax rate of 47 per cent.
“We need to make sure we take urgent action when it comes to personal income taxes, because so many working families are suffering from that right now,” he told reporters in Sydney on Wednesday.
Federal Minister Murray Watt said that workers will be relieved with the tax cuts that will come into effect soon.
“The Prime Minister and all Australians won’t have to wait long until we see the next tax cut introduced for all Australian workers, because that will happen on July 1,” he told Seven’s Sunrise programme.
“This budget will continue to cover the tax cuts we made in the last election, so we have adjusted both the upper and lower tax thresholds and rates.”
The tax cuts introduced in the 2025 budget will save taxpayers up to $268.
But shadow treasurer Tim Wilson said the NSW premier was right to criticize current tax levels.
“We need to find a way to reduce the top marginal rate. I firmly believe that we should want Australians to work hard and be able to be rewarded for their work,” he told ABC Radio.
“There are a lot of Australians working harder now than ever before, or working harder, and they don’t feel like their hard work is being rewarded.”
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