Labor Cabinet secretary Andrew Charlton has conceded the new capital gains tax regime “doesn’t interact well” with small businesses that have a low capital base.
The comments made by the Assistant Science Minister in an interview on Friday appear to validate the sector’s concerns about the reform.
Asked if the Budget “outcry” was “unwarranted”, Mr Charlton acknowledged the new system hurts underfunded businesses.
“The point that many start-up founders, the point that many small businesses have been making is valid,” he said.
“It’s a valid point because that new regime doesn’t interact well if you have a really low capital base because you’ve got nothing to inflate off.
“So, there are real concerns out there.”
The Labor rising star added that the Treasurer had himself recognised the concerns of the sector before the Budget — referencing a note in the final edition vowing continued consultation.
Treasurer Jim Chalmers had hinted post-Budget that the Government could be open to negotiation about the implementation of CGT changes for the start-up sector because of their often unique sweat equity approach.
Dr Chalmers had yesterday described much of the criticism as a “scare campaign built on lies” but had also agreed that the changes were “contentious”.
It comes after waves of small business owners used AI-generated images of Anthony Albanese to criticise Labor’s decision to include all asset classes in the CGT changes in what those critics are calling a “tax on success”.
The 50 per cent CGT discount will be axed to make way for an inflation-indexed model and a 30 per cent minimum tax rate on all net capital gains, covering everything from property to new shares and crypto.
But the fallout continued from the promise-breaking Budget on Friday, with new polling carried out by DemosAU for Capital Brief showing One Nation had overtaken Labor.
The poll, which was undertaken between May 14 and 20, showed Labor had sat flat on a 26 per cent primary vote while Pauline Hanson’s minor party rose to 28 per cent.
It comes amid reports that the Albanese government is considering a possible carve out for the changes to new discretionary testamentary trusts.
A concession could help Labor counter claims from opponents that the changes would be a “death tax” or “death duty” on Australians.
When asked about the speculation on Friday, the Prime Minister labelled claims Labor was trying to hit to inheritances as “misreporting” but added there would be consultation around trusts.
“Let’s be very clear. When it comes to some of the misreporting that’s there, we’re not interested,” he said.
“There’s no measures in there that are going to hurt inheritances.
“On trusts, there’ll be a consultation period about that, and we made that clear on Budget night.
“So, we’ll work through the legislation. We’ve said (it) will be introduced in the second half of the year.”
Former Labor Minister Joel Fitzgibbon questioned the party’s approach, saying from the outside it appeared like “reform for reform’s sake”.
“It looks to me a little bit like reform for reform’s sake,” he told Sky News on Friday — characterising the Budget as “rushed”.
“I mean, they’re only securing about . . . just over a billion dollars a year in revenue terms — that sounds a lot of money to your viewers — but in Federal Budget returns, it’s not.
“I mean, it’s a lot less than we spend on subsidising renewables each year.
“I think the government got caught up in this push to . . . use their 94 seats in the House of Representatives to pursue some reform.
“So there’s not a big return for the government in any of this. Now, of course, they’re right to focus on housing affordability.
“But of course, there’s too much doubt in the community, and indeed, amongst the experts in that area as to whether this is going to make any rule and meaningful difference in housing affordability.
“I doubt right now whether the government’s going to get any bang for its buck out of this budget.
“Alternative, of course, it’s likely to be a drain on it’s political support for some time.”
Mr Fitzgibbon wasn’t the only political blast from the past to be unearthed from this year’s Budget, with former Labor prime minister Paul Keating even having his two cents.
Mr Keating, who introduced CGT in the 80s, stoked the flames of Labor’s continuous accusations of misinformation fire — insisting it was just “arguing” from “wealthy people”.
Several of Federal Labor MPs and Senators took have taken to their own social media followers in recent days to call out the “misinformation” and to try to explain the Budget.
But while Federal members scrambled to set up selfie sticks, State Labor leader Chris Minns this week backed in the online criticism by saying high income-earners were effectively working half the week.
“The top marginal rate is 47 per cent. As I said in parliament last week, you work Monday, Tuesday, and half Wednesday for yourself, and then Wednesday, Thursday, and Friday for the government — that’s a tough burden for a lot of families to hit,” he had said on Wednesday.
Mr Fitzgibbon bluntly summarised the sell as “messy”.
Opposition leader Angus Taylor also accused Labor of appearing to rush the Budget and insisted they appeared “panicked” and “scrambling” after the fall out.
In his Budget reply speech last Thursday, Mr Taylor had presented a alternative tax reform agenda — headlined by addressing bracket creep.
Bracket creep occurs when inflation and pay rises push workers into the next tax bracket, meaning any financial gains are offset by higher taxes.
“There’s no plan here. There’s a panic and they’re scrambling for the exit because they hadn’t realised what they were doing,” Mr Taylor said on Friday.
In a promising echoing the 2013 landslide victory winning campaign slogan of former Liberal Prime Minister Tony Abbott to “scarp the tax” in relation to Julia Gillard’s infamous carbon tax — Mr Taylor also vowed to “axe Labor’s toxic taxes”.
“On Thursday night last week, I laid out an alternative path forward for this nation. For a fairer, freer, better Australia. Where we axe Labor’s toxic taxes and restore reward for effort and aspiration,” he said.
“What we’re seeing now is not a plan, it’s a panic. What we need now is not a carve-out, we need an axe. We want an axe.”
“This Treasurer and this Prime Minister does not understand business, does not understand the private sector.
“They’re looking for any distraction. They can find at the moment because they’ve realised, what a mistake they’ve made.”
The Prime Minister and Dr Chalmers had engaged on a Budget road show in the days after it was handed down — in and attempt to sell it to the nation.
After the PM was peppered with questions in Perth on whether Labor would also break a promise on the State’s fair share of GST, Mr Albanese returned east via Alice Springs to meet with the family of five-year-old Kumanjayi Little Baby.
The little girl was alleged murder after she vanished from Old Timers Camp on the outskirts of Alice Springs on April 25.
On Friday, Mr Albanese met with colleagues and friends of Warrant Officer Lachlan Muddle — who died during a parachuting training course at the Jervis Bay Airfield on the evening of May 11 — to express his condolences.
Mr Taylor also accused the government on Friday of trying to erode Australia’s standard of living and highlighted the cutting of the counter-terrorism budget in the lead up to the Bondi Beach massacre.
Mr Albanese had brushed off a report, published by the ABC, about the Australia’s intelligence agencies’ counter-terrorism funding, saying the government had increased ASIO’s budget.
“As we have for all the national security agencies,” the PM had said.
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