Australia’s peak business coalition has formed an unprecedented united front to demand the Federal Government abandon its sweeping capital gains tax overhaul, warning that the “rushed” legislation will trigger a sustained retreat in business investment and ultimately drag down national productivity and wages.
The high-stakes intervention comes as a short-burst, two-day parliamentary inquiry kicked off today to scrutinise the first tranche of the measures, which Treasurer Jim Chalmers has billed as the most significant shake-up of the national tax system in a quarter of a century.
In a searing joint statement, the Australian Chamber of Commerce and Industry (ACCI), the Australian Industry Group (Ai Group), the Business Council of Australia (BCA), and the Council of Small Business Organisations Australia (COSBOA) urged Parliament to reject the legislation outright.
The peak bodies, representing businesses of all sizes that employ millions of Australians, declared that they “strongly oppose the Federal Government’s proposed capital gains tax changes and call on the Parliament to reject the rushed legislation, which will discourage investment at a time when Australia needs it most”.
The business groups argue that replacing the long-standing 50 per cent capital gains tax discount with an inflation-indexed deduction, alongside a new minimum tax rate, will severely disadvantage Australia in an increasingly fierce global race for capital.
“At a time of growing global competition, Australia cannot afford policies that make us a less attractive investment destination,” the joint statement noted. “Instead, we should be competing to attract the capital our projects and businesses need to grow the economy and fund the services Australians rely on”.
ACCI Chief of Policy and Advocacy, David Alexander, speaking on the unfolding policy debate, strongly condemned the government’s aggressive timeline, labelling the proceedings a “snap inquiry” with “no excuse” given the sheer complexity of the changes. He warned that the fast-tracked process denies proper oversight to a highly volatile issue.
“There’s no excuse for having a snap inquiry, two days… when there’s problems that are emerging every day, really,” Mr Alexander said. “This deserves a longer period of scrutiny. We have grave concerns about the impacts of this on the business community”.
According to Mr Alexander, the economic fallout from the proposed extra tax on investment will be both significant and sustained.
He cautioned that a chilling effect on business investment would inevitably flow through the broader economy, hampering GDP growth and suppressing Australian worker pay packets.
“The extra tax on investment in business is going to have a significant and sustained negative impact on business investment,” Mr Alexander warned. “And that’s going to flow through to our growth, our productivity, and even wages in the years ahead”.
The unified corporate backlash underscores a deepening rift between the business community and the Albanese government.
Industry leaders expressed deep frustration that the ad-hoc legislation fundamentally contradicts the spirit of the Government’s Economic Reform Roundtable held last year, where they had engaged in good faith to lift productivity and competitiveness through holistic reform.
The joint release stated that the approach taken in this legislation is “fundamentally inconsistent with that process and its objectives,” adding that because the changes are not slated to take effect until July 1, 2027, “the speed of this process raises serious concerns about whether any genuine economic impact analysis has been conducted”.
The groups also warned of widespread damage down the economic ladder, stating that “if passed, these changes will affect businesses of every size, from companies investing in major projects to small and family-run businesses seeking to grow, create jobs and support their local communities”.
They concluded with a stern warning against piecemeal policy adjustments: “Tax reform should be approached holistically, considering the interaction between personal, company, consumption and state taxes as part of a long-term plan. We cannot risk ad hoc changes and the unintended consequences they bring across the economy”.
The government, meanwhile, is treading carefully as it attempts to navigate the fierce blowback. Assistant Treasurer Daniel Mulino indicated the government remains open to discussions and potential carve-outs for specific sectors, such as tech startups, but maintained that the current taxation system is fundamentally broken. With the legislation requiring the support of the Greens to clear the Senate, and the committee due to deliver its report by June 19, the business lobby is making it clear that minor concessions will not suffice to fix what they view as a fundamentally flawed policy process.