Costello Says Albanese’s Capital Gains Tax Change Will Hurt Young Investors

*TL;DR: Former Liberal treasurer Peter Costello warns that the Albanese government’s plan to remove the 50 % capital gains tax discount will push Australia’s investment tax rates into the world’s highest tier and limit wealth‑building for younger Australians.*

Context The 2024‑25 budget proposes to end the 50 % discount on capital gains – a concession introduced in 1999 to encourage investment. Capital gains tax (CGT) is levied on profit from the sale of assets such as shares or property. The discount halves the rate for assets held longer than a year.

Key Facts Costello, who served as treasurer from 1996 to 2007, says the proposed repeal will place Australia among the developed world’s most heavily taxed investment environments. He argues that younger Australians will lose the tax advantage that older generations and current Labor politicians have used to accumulate assets. The discount’s removal also marks a reversal of Labor’s earlier support; the party voted for the reform nearly three decades ago when it passed the legislation.

What It Means Eliminating the discount will raise the effective CGT rate from roughly 15 % to 30 % for long‑term holdings, doubling the tax burden on profits. For first‑time homebuyers and small‑scale investors, the change could reduce after‑tax returns and discourage entry into the market. Analysts note that higher taxes may shift investment toward tax‑advantaged accounts or overseas assets, potentially affecting domestic capital formation.

Costello’s criticism frames the policy as a “backflip” by Labor, suggesting political inconsistency could erode confidence among voters who value fiscal stability. Critics of the repeal argue that the discount primarily benefits high‑income earners and that removing it could improve revenue for public services.

Looking Ahead Watch for parliamentary debate outcomes and any amendments that might preserve a reduced discount or introduce alternative incentives for young investors.