Welcome to the neighbourhood

The Budget may weigh on today’s taxpayer, but the long-term pay-off is real.

- Michelle Baltazar

Peace of mind comes in all shapes and sizes. The Federal government tries to provide some of it through the Budget, which is an annual ritual where we gather around the political campfire and talk about tax.

Yes, tax. While the Budget is technically about how the government collects and spends money, what usually makes headlines from the 456-page report and supporting papers is the suite of tax reforms.

Since 1999, there have been few structural changes to the way Australians are taxed. At times, specific groups are affected.

Retirees, for instance, were affected by a super tax-free cap introduced in 2017. But for most people, policy shifts have largely been what experts call ‘tinkering at the edges’.

Not this year.

In what some describe as the biggest tax overhaul in the past three decades, the government has proposed two significant reforms: removing negative gearing for existing residential properties (while exempting new builds) and replacing the 50% capital gains tax discount with a less generous and more complex model.

The changes have dominated headlines and drawn flak from investors who relied on longstanding tax settings. Meanwhile, the beneficiaries the government points to - younger Australians and first-time homeowners - have been less visible in the debate.

With Senate approval uncertain, the reforms hang in the balance.

Blind audition

Strip away the politics and let’s give the policy room to breathe.