Why budget rhetoric won’t match reality for many younger Australians

As Jim Chalmers was doing the round of the parliamentary press gallery on Tuesday, he was encouraging journalists to see the tax reforms in the budget as the most ambitious since the turn of the century. The core of the tax package is that instead of paying tax on just half of profits on the sale of investments held for more than a year, we will return to the pre-1999 version where investors would get a discount based on inflation. And from budget night, negative gearing is a thing of the past for new investors. There are exceptions for investors in new builds because the government wants to encourage as much supply as possible. The government is also planning to put a minimum 30% tax rate on income from discretionary trusts – a favourite vehicle for many wealthy households to minimise their taxes. The treasurer in his traditional post-budget address on Wednesday said: “It’s clear that these concessions have fundamentally distorted our housing market. “The current tax arrangements tip the balance against the first home buyers, and that’s why we’re changing them.” But do they tip the balance back far enough to aspiring homeowners? Are the reforms as progressive as Labor claims? A fairer tax system Some experts believe the true benefit of these tax reforms is not that it improves housing affordability to any extent, but that it makes the taxation system fairer. …