Paul Keating has rubbished claims from the Coalition and the startup sector that Labor\u2019s reforms to capital gains tax will undermine entrepreneurship, insisting the changes are \u201cmarginal\u201d and badly needed to improve housing affordability.<\/p>\n
Amid a week-long assault on Jim Chalmers\u2019 budget<\/a>, the former Labor prime minister said wealthy individuals had been the beneficiaries of preferential treatment for investments for decades \u2013 rules he said had distorted the tax system and disadvantaged wage earners.<\/p>\n Lashing John Howard and Peter Costello for introducing the 50% capital gains tax discount and dramatically fuelling house prices in Australia, Keating said the Liberals had helped \u201cused car selling and dodgy accounting mates\u201d.<\/p>\n Changes introduced in 1999 had seen house prices increase from nine times the average household income to 16 times\u2019 the income.<\/p>\n \u201cWealthy people are out there now arguing against the government\u2019s change notwithstanding the stark evidence of the price shock Howard and Costello induced,\u201d Keating said in a blistering statement.<\/p>\n \u201cAnd they want to split off startup capital and shares as if the individuals commentating have not made a feast of it already. They want to retain a preference for capital over wage and salary income.\u201d<\/p>\n The proposed CGT changes<\/a> \u2013 replacing the 50% tax discount on profits with a new cost-base indexation model, meaning tax on profits after inflation, and a minimum 30% tax rate imposed \u2013 have been strongly opposed by some tech founders.<\/p>\n Sign up for the Breaking News Australia email<\/a><\/p>\n The architect of major economic reforms as treasurer in the Hawke government, Keating used tech company Canva to argue healthy valuations for successful startups would leave debate about tax settings as secondary.<\/p>\n \u201cPunters with a big idea won\u2019t be put off by some marginal change to the tax rate. The rush of entrepreneurial blood to the brain always dominates.<\/p>\n \u201cThe simple fact is that income is taxed too heavily while capital is taxed too lightly. That is the fact of it \u2013 and has been the fact of it.<\/p>\n \u201cAnd that distortion has made housing unaffordable for a whole generation.\u201d<\/p>\n Keating\u2019s intervention comes as the government struggles with a backlash against the changes. Albanese blamed misinformation and dishonesty on Wednesday.<\/p>\n \u201cWhat we are doing is taxing more equally the income earned from working, which is how most people overwhelmingly earn their dollars, with income earned from assets,\u201d the prime minister said. \u201cNow that is a reform that is fair.\u201d<\/p>\n Chalmers has stressed the government is continuing to consult the tech sector but has given no firm indication of any change of approach so far.<\/p>\n The shadow treasurer, Tim Wilson, told the National Press Club the budget represented an abuse of trust, warning Labor would kill the startup sector in Australia.<\/p>\n \u201cWhere we should have got unity, we had the prime minister stoke fights around the kitchen tables of the nation,\u201d Wilson said.<\/p>\n The opposition leader, Angus Taylor, has pledged to oppose the tax measures in parliament and repeal them<\/a> if the Coalition wins the next election.<\/p>\n