Treasurer Jim Chalmers admits ‘there are certainly some intergenerational pressures’ still baked into Australia’s future.
Treasurer Jim Chalmers has said the Labor government has no plans to introduce an inheritance tax to capture some of the massive wealth transfer being passed on by the baby boomer generation.
Hours after handing down the latest Intergenerational Report on Monday, Chalmers was asked if the government has been thinking about further tax reform, to bring back inheritance taxes to help even the playing field.
“We’re about to experience a major transfer of wealth from baby boomers to the generation beneath them. Are you considering some form of inheritance tax,” he was asked while appearing on the ABC’s 7.30 overnight.
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The Treasurer was quick to rule out the idea.
“No, we’re not,” he said, arguing the tax changes in the budget were about addressing intergenerational wealth.
“But when it comes to intergenerational wealth, the most important thing we’re doing is reforming the housing market by reforming the tax system,” he said.
Critics of the change to the capital gains tax (CGT), however, have argued it will hamper the ability for younger Australians to build wealth on their own compared to previous generations who enjoyed the more generous investing tax concession, and thus potentially make the inheritance divide more stark.
A survey of 1,500 Australian investors for Global X this week found families with children at home were more likely than any other household type to scale back their investment intentions following the tax changes in the budget, with chief executive Alex Zaika warning “it has a really negative impact on those people we are trying to help most”.
Inheritance taxes are unpopular, but not new
Australians have faced inheritance taxes in the past, which have also been called death duties. Federal and state levies were imposed on recipients in the wake of someone’s death, however these were abolished in the late ’70s and early ’80s.
The Australia Institute is among the groups that have called for an inheritance tax to be reintroduced, with the think tank previously proposing it could be aimed to the ultra wealthy and only apply to the top 5 per cent of people across the country, or those with $5 million to $10 million worth of inheritance to pass on.
“I understand that it’s controversial in the media, in the general public, and amongst politicians, but if you talk to economists, they agree that inheritance taxes are a good form of tax,” the Institute’s senior economist Matt Grudnoff previously told Yahoo Finance.
