Treasurer promises ‘ambitious’ tax-reforming budget
Changes to the way capital gains and businesses are taxed are planned, with Chancellor of the Exchequer Jim Chalmers promising further reforms to level the playing field for younger generations and encourage stronger investment.
While the scope of the reforms announced in May will depend on how much the government can afford and global developments, Dr. In his speech on Thursday, Chalmers promised that the fifth budget would be ambitious.
His pledge comes amid reports the Treasury is preparing changes to capital gains tax relief, negative gearing, trusts and tax exemptions for electric vehicles.
Dr Chalmers says the uncertainty caused by conflict in the Middle East has only increased the need for reform.
“Any reform will be guided by some clear principles,” he told a meeting of business economists in Melbourne.
“Firstly, we know that an outdated tax system has weighed the opportunities facing young Australians and future generations, so any change would significantly focus our intergenerational responsibilities.
“Second, we are focusing on better encouraging productive business investment if we can afford it.
“And third, making the system simpler and more sustainable.”
These are the same three principles that Dr Chalmers said would guide his thinking on tax reform after the economic roundtable in August 2025.
A Greens-led parliamentary inquiry into the capital gains tax cut found the measure unequally benefited wealthier Australians and biased the market towards investors at the expense of property owners.
Labor senators Ellie Whiteaker and Richard Dowling, who signed the report, added that young Australians face increasingly different economic circumstances than previous generations.
Advocates of the ambitious changes, including independent MP Allegra Spending and a number of economists, told the AAP that the 2026 budget would be the government’s best opportunity for tax reform in decades due to Labor’s large majority in parliament and the long time until the next federal election.
Dr Chalmers will also use his speech to warn of “tough decisions” in the budget to stabilize economic productivity, reform and help the country ride out the wave of uncertainty caused by the war in the Middle East.
“The conflict in the Middle East is a stark reminder of how quickly the global economic landscape can change,” he will say.
“It increases inflation risks, puts pressure on growth and adds to already high uncertainty.
“But it is also a reminder of why our three core economic problems are so urgent.
“All this economic uncertainty and volatility is the reason for more reform, not less.”
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
