Will hiking CGT actually help younger Australians?

Hint: no

Intergenerational equity has become the word du jour in the lead up to the budget. So, in the name of “equity” the ALP plans to hike capital gains taxes on all asset classes.

Jim Chalmers has claimed that hiking CGT is the “right decision” done for the “right reasons”. Of course, one might be forgiven for wondering why they did not take such a decision to the election and why it is fine for a government to lie to get elected. But, let’s look at whether it even is the “right decision”.

The most frequently mentioned change is a reversion of CGT rates to the indexation method. This would adjust the capital base (i.e., purchase price, and presumably additional works) with inflation. The tax would then be on the real returns. It appears there will be partial grandfathering. Negative gearing also looks set to be eliminated.

There are several fundamental issues with the CGT hike.