Albanese government self-inflicting a $20b budget blow by taxing unrealised gains, Wilson Asset Management report reveals

Sky News AU

19 hours ago

Labor faces an almost $20b blow from its controversial proposal to tax unrealised gains in a self-inflicted setback against its productivity agenda.
This is a major finding from Wilson Asset Management in its second report on Treasurer Jim Chalmers' plan to double the tax rate on super accounts above $3m.
The plan has drawn criticism as Labor will not index the threshold over time and the tax will capture paper gains on assets such as properties, shares and farms.
WAM's latest report shows an array of companies that are either small growth businesses or startups will forego $19.73b in tax revenue to the government over four years as fewer firms reach profitable maturity.
The report states there are 611,823 companies in Australia that turn over less than $2m per year and would need financing through a self-managed super fund or via personal contributions.
If each small company contributed an average of $15,015.91 in tax per year to the government, the total tax revenue would be $9.19b of annual corporate tax from these companies.
WAM estimates the taxing of unrealised gains would lead to a potential 53.7 per cent decline in tax revenue from innovative companies, bringing the corporate tax from these small companies down to $4.93b per year.
This brings the total losses to $19.73b over four years due to Labor's decision to target unrealised gains.
The indirect self-blow from Labor's super tax comes as it embarks on a productivity agenda to bolster the economy.
Mr Chalmers in June said the Albanese government wants to overhaul the nation's flailing productivity rate in its second term.
Productivity has slumped from around 1.8 per cent in the 2000s and early-mid 2010s to 0.9 per cent in the 2023 financial year.
WAM's founder Geoff Wilson said the unrealised gains tax flies directly in the face of this agenda.
'It is a policy that threatens to undermine the foundations of Australia's economic dynamism by inhibiting the very companies that drive innovation, competition, and future growth,' Mr Wilson said in the report.
'It will stifle investment and it will not deliver the productivity reform that is desperately needed.'
The proposed unrealised gains tax and the subsequent $20b blow to the budget that WAM has projected could also hurt the government as it seeks to minimise a forecasted decade of deficits.
The Albanese government's gross debt will surge past $1 trillion in the 2025-26 federal budget, placing significant burden on voters ahead of the federal election.
The amount of taxpayer money being spent on the government's own interest repayments trails behind only welfare, health and defence as a budget expenditure.
The level of gross debt reaches $940 billion in 2024-25 before hitting $1.02 trillion in 2025-26 and growing every year thereafter.
After Labor's sweeping election victory, the Albanese government now only needs the support of the Greens to get the super tax legislation through the Senate.
The Greens called for the threshold to be lowered to $2m, but indexed over time.
Mr Wilson has previously warned Labor's proposed super tax would impact the 'lifeblood of Australia' as people would restructure their investments away from risk.
He also noted it could 'destroy innovation' and entrepreneurialism as a large amount of investment into technology start-ups comes from self-managed super funds.