Cut capital gains tax discount for property investors if tax breaks are given to businesses, WAM’s Geoff Wilson argues

Mr Wilson led the attack on Labor’s controversial plan to tax unrealised gains on funds in superannuation accounts above $3m and spearheaded a campaign against Labor’s 2019 franking credits policy.

He has weighed in on reports Labor is considering changes to the 50 per cent capital gains tax deduction for property investors and will attend a Greens-led senate inquiry on the topic later this month.

Treasurer Jim Chalmers has not ruled out changes to the taxes and stressed the government was worried about “intergenerational issues in housing and in tax”.

Introduced under John Howard in 1999, the deduction means investors receive a 50 per cent tax discount on the profit of an asset they have held for at least 12 months and then sold.

Mr Wilson said any changes to the tax system should reward investment, create jobs, build businesses and lift productivity rather than just raise more revenue.

“Any change needs to be revenue neutral and reallocate existing tax concessions to better support economic growth and the Australian economy,” he said in a statement to SkyNews.com.au.

Australia’s lagging productivity, which sits near historic lows around 0.8 per cent per annum, came into focus last year after Labor’s election win and the subsequent economic roundtable.

It is not set to improve much, as the Reserve Bank of Australia has forecasted the worst medium-term economic growth ever.

Mr Wilson said a key reason why Australia’s productivity lags is the tax system funnels too much capital into the passive appreciation of housing instead of productive businesses that drive innovation, lift real wages and create jobs.

“The current uniform 50 per cent CGT discount treats speculative gains on property the same as higher-risk investments in operating companies — that’s bad policy,” he said.

“By cutting the discount on existing residential property, we can reduce the tax-driven bias toward non-productive speculation without punishing new housing supply.

“At the same time, lifting the discount for Australian operating business investments rewards the entrepreneurs and scale-ups that build our economy.

“This is pro-investment, pro-productivity reform that must be revenue neutral.”

He said economic reform is not just about raising more tax, but redirecting this money to where it grows jobs and innovation for all Australians’ benefit.

“We need a tax system that encourages risk-taking and long-term commitment to Australian businesses, not one that over-rewards leveraged property plays,” Mr Wilson said.

“Holistic thinking, not short-term tax grabs.”

Labor went to the 2016 and 2019 elections promising to pare back the capital gains discount to 25 per cent.

The Albanese government asked Treasury for advice on scaling back negative gearing and CGT concessions in 2024.

Treasury last year estimated the top one per cent of taxpayers enjoy about 54 per cent of the capital gains tax discount.

Shadow finance minister James Paterson said any changes to capital gains tax would mean Labor is breaking election promises to fund massive government spending.

“If the government breaks an election commitment, which they’ve taken to successive elections to make no changes to capital gains tax or indeed negative gearing, it will be a very serious breach of faith with the Australian people,” Mr Paterson told Sky News on Thursday.

“It will a desperate grab for revenue from a government that can’t keep spending under control.”

Mr Wilson’s calls to ensure any tax changes are revenue neutral come as government spending sits well above historical averages.

Outside of the Covid-era, government spending as a proportion of GDP is the highest in 30 years.

Treasury forecasts spending to GDP will hit 26.9 per cent in 2025-26.

From the 1960s to before the pandemic, government spending was about 22 per cent on average.