{"id":679548,"date":"2026-05-18T22:59:15","date_gmt":"2026-05-18T22:59:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/679548\/"},"modified":"2026-05-18T22:59:15","modified_gmt":"2026-05-18T22:59:15","slug":"labor-capital-gains-tax-overhaul-why-top-party-adviser-lachlan-harris-is-warning-against-business-tax-hikes","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/679548\/","title":{"rendered":"Labor capital gains tax overhaul: Why top party adviser Lachlan Harris is warning against business tax hikes"},"content":{"rendered":"

\"PaulSave<\/p>\n

You have reached your maximum number of saved items.<\/p>\n

Remove items from your saved list<\/a> to add more.<\/p>\n

AAA<\/p>\n

A top adviser to former Labor leader Kevin Rudd and NSW Premier Chris Minns has joined a growing group warning that Prime Minister Anthony Albanese and Treasurer Jim Chalmers\u2019 decision to hike the capital gains tax on businesses will stifle the economy and drag productivity, as Labor MPs grow uneasy about the backlash over the controversial measure.<\/p>\n

Albanese and Chalmers overhauled the property price-fuelling combination of negative gearing and the CGT discount last week<\/a> and extended the tax rise on capital gains to all types of investments.<\/p>\n

\"PrimePrime Minister Anthony Albanese, Treasurer Jim Chalmers and Housing Minister Clare O\u2019Neil meet Mika Rosewarne and her dog, Pikelet, in Canberra to talk about housing measures contained in last week\u2019s budget.Alex Ellinghausen<\/p>\n

Lachlan Harris, a close adviser to Rudd when he was prime minister, congratulated Labor for removing the discount from residential housing, a move he described as long overdue, but argued that going beyond housing would create \u201ceconomy-wide\u201d perverse incentives.<\/p>\n

The concerns of the Labor figure, an investor who founded and sold the Budgy Smuggler swimwear firm, are shared by some of the Labor caucus.<\/p>\n

Harris argues that a policy ostensibly designed to create equity between generations would actually make it \u201cmuch, much harder for young Australians to start businesses, to work in small businesses, and for those businesses to raise money\u201d.<\/p>\n

\u201cThis is not just for tech start-ups in Surry Hills: this is businesses in Box Hill and Castle Hill,\u201d he told this masthead.<\/p>\n

\"FormerFormer prime minister Kevin Rudd and former Labor former adviser Lachlan Harris.Andrew Taylor <\/p>\n

\u201cI, personally, think we need to reverse that measure to ensure the CGT change only applies to residential property. I really would urge the PM and treasurer [to] consider carefully whether this policy needs to be significantly adjusted so that a lot more consultation can occur over a long period of time.\u201d<\/p>\n

Harris, whose parents founded the Harris Farm Markets chain, said he had sold his businesses years ago and \u201cit\u2019s the next generation of young business builders that will be hit hardest by this change\u201d.<\/p>\n

The Coalition is preparing to announce financial protections for small businesses in a speech by shadow treasurer Tim Wilson on Wednesday, as the opposition tries to recruit small businesses to the tax battle it intends to fight through to the next election.<\/p>\n

Related Article\"Jim<\/a><\/p>\n

High streets stores, drone firms key to Australia\u2019s national security, and outfits involved in Labor\u2019s Future Made in Australia policy would all be caught up, Harris argued, as a new inflation-adjusted model of taxing gains could lead to some firms being taxed above 40 per cent when they sell their businesses, up from about 23 per cent under the previous rules.<\/p>\n

\u201cThose businesses are the future of the Australian economy,\u201d he said. \u201cThis is not just a problem for tier one AI start-ups, it\u2019s a problem for every single business in the country.<\/p>\n

\u201cIt is a very significant change to the incentive structure of starting a business and employing people.\u201d<\/p>\n

Several Labor MPs from three states, none of whom wanted to go public, said they were broadly supportive of Labor\u2019s most courageous budget to date.<\/p>\n

Related Article\"Budget<\/a><\/p>\n

However, they were nervy about public complaints about the effect on shares, business sales and tax treatment of so-called \u201cbucket companies\u201d, a popular tax set-up for hundreds of thousands of businesses that fear being double-taxed.<\/p>\n

The government is replacing a flat 50 per cent discount on capital gains to a model indexed to inflation with a minimum 30 per cent tax.<\/p>\n

A Labor source said Albanese had not yet found the language to explain why the CGT changes were being applied to shares and businesses. The source pointed to last week\u2019s exchange with a finance influencer who asked why CGT changes were not confined to housing, to which Albanese replied: \u201cWe want to make sure the drive of investment was to more productive sides.\u201d<\/p>\n

Asked about the CGT shift during his Monday blitz of major cities to campaign on equity and home ownership, Albanese said he was focused on \u201cbetter aligning income from work with income from assets\u201d.<\/p>\n

\u201cWhat they\u2019ll be doing is having for [the] future, from the future date, is taxed on real gains, so making a difference,\u201d he told reporters in Adelaide. \u201cThat\u2019s called tax reform, and it\u2019s something that\u2019s needed in this country.\u201d<\/p>\n

The government released Treasury advice to this masthead on Monday afternoon. The document shared by the government claimed that the OECD, a league of rich nations, had found \u201cno clear evidence to support favourable treatment of capital gains to promote investment\u201d.<\/p>\n

Chalmers announced a $13 billion productivity package in last week\u2019s budget as well as a loss carry-back scheme, bigger instant asset write-offs, and incentives for start-ups in a bid to support cashflow and boost early-stage investors. The suite of policies was welcomed by the business lobby.<\/p>\n

Other sources in the caucus said they were worried that ex-Liberal voters who had drifted to Labor since 2019 \u2013 helping snatch a group of suburban seats such as Deakin, Menzies, Reid and Bennelong \u2013 would protest. Chinese and Indian-speaking channels have been actively debating the tax changes, sources said.<\/p>\n

Labor\u2019s voting coalition has expanded from blue-collar workers to take in many white-collar professionals. Those aspirational voters have not been turned off by Labor rhetoric about redistribution of wealth, and have soured on the Coalition\u2019s economic and cultural attitudes.<\/p>\n

\"BillBill Kelty, a former union leader who worked closely with Paul Keating and Bob Hawke, is calling for income tax reform.Ben Rushton<\/p>\n

The remarks from Harris, who remains an influential thinker in Labor circles, carry weight because it is rare for him to criticise Labor policy.<\/p>\n

Seek founder and venture capitalist Paul Bassat<\/a> and investor John Wylie are also pushing for the CGT proposals, yet to be legislated, to be wound back. Labor doyen Bill Kelty told this masthead<\/a> last week that Chalmers should reduce the top marginal rate of income tax and index tax brackets. Chalmers announced a $250 tax offset last week.<\/p>\n

The treasurer said on Sunday that he understood tech start-ups in particular could face higher tax bills under the new model, opening the door to a UK-style exemption.<\/p>\n

Another business figure with connections in the Labor Party, who requested anonymity to be as frank as possible, said government ministers appeared to misjudge the public reaction to the CGT changes partly because the cabinet contained so many property investors and so few people who ran businesses.<\/p>\n

\u201cWhere this ends up going is you have a situation where anyone who opened their own pharmacy, carpet business or dentistry, and hopes to sell it as part of their retirement, will be caught,\u201d they said.<\/p>\n

\u201cThey would be mistaken to think a [carve-out for tech start-ups] will solve this.\u201d<\/p>\n

Bennelong Labor MP Jerome Laxale, who represents a seat with an affluent Chinese-speaking community, said on Sky News that he\u2019d received questions in his inbox about the tax moves, some critical and some supportive, while outer suburban Liberal frontbencher Aaron Violi said he\u2019d been \u201cinundated\u201d with emails from younger Australians worried about their future wealth.<\/p>\n

Cut through the noise of federal politics with news, views and expert analysis. Subscribers can sign up to our weekly Inside Politics newsletter<\/a>.<\/p>\n

Save<\/p>\n

You have reached your maximum number of saved items.<\/p>\n

Remove items from your saved list<\/a> to add more.<\/p>\n

\"PaulPaul Sakkal<\/a> is Chief Political Correspondent. He previously covered Victorian politics and won a Walkley award and the 2025 Press Gallery Journalist of the Year. Contact him securely on Signal @paulsakkal.14.Connect via X<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Save You have reached your maximum number of saved items. Remove items from your saved list to add…\n","protected":false},"author":2,"featured_media":679549,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[64,63,44],"class_list":["post-679548","post","type-post","status-publish","format-standard","has-post-thumbnail","category-australia","tag-au","tag-australia","tag-news"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/679548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=679548"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/679548\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/679549"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=679548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=679548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=679548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}