EDITORIAL: One headache after another in Canberra over controversial tax changes

Another day, more contention in Canberra around who will and who won’t be eligible for carve-outs from controversial changes to capital gains tax.

The ongoing chaos over exemptions for both business and property investors is further evidence that Labor never was really ready to commit the changes to legislation.

Housing Minister Clare O’Neil on Sunday became the latest from Canberra to offer an answer that actually answered little, other than showing the Government was never really ready to legislate the planned changes.

Her take is that it is important the carve-outs issue gets resolves “speedily.”

Fixed quickly. In other words, via a quick-fix — to what has clearly become the Federal Budget’s most glaring and contentious oversight.

‘Speedily’ seems like an unhappy halfway between ‘this should have been sorted properly in advance’ and committing to do the job, the research and the consultation with those affected thoroughly.

Either of which would be decidedly better than the scenario Anthony Albanese and Jim Chalmers are attempting to work their way through by pushing change legislation now, supplemented by a promise of unknown carve-outs for some down the track.

The Prime Minister and Treasurer are at least consulting with the tech sector, small businesses and farmers over the plans.

However, whatever position they land on to offer exemptions or carve-outs from the changes beyond investments in property is unlikely to be reflected in the tax legislation the government is pushing to pass by the end of June.

The CGT changes will scrap the existing 50 per cent discount – introduced in 1999 – in favour of an inflation indexation model that will apply to all asset classes, including investment properties, shares, and businesses.

There’s little evidence the political fight around CGT on property ownership will translate into greater opportunity for young people to enter the market, which is the intent of the change, at least ideologically.

But the measurable effect here in WA in the weeks since Dr Chalmers unveiled the budget measure is in the slowdown of the home sales market. Not a price drop, which is what would actually help first-home buyers.

In fact homes in WA are continuing to rise about $4000 per week, according to fresh data out today.

It’s a long bow to suggest the changes will end up helping young people get their foot on the property ladder.

But a slowdown in the market could leave a giant hole in the State Government’s coffers, considering the heavy reliance on stamp duty charges.

Analysts say a slowdown of 10 to 20 per cent - which many are predicting would cost the WA Government hundreds of millions of dollars.

Home investors are furious. So first-home buyers aren’t winning. The State Government would be displeased.

In Parliament, One Nation says Labor’s changes should apply to anyone with more than two negatively-geared properties, the Greens say one and the Coalition opposes the tax changes completely.

It all talks to a situation where no one can yet be happy about the changes.

And its growing increasingly likely that very few — if any — ever will be.

Responsibility for the editorial comment is taken by Editor-in-Chief Christopher Dore.