Controversial tax change passes first vote in parliament

The government’s controversial tax reform has passed the lower house, but the real challenge lies later this month.

Treasurer Jim Chalmers’ first tranche of legislation on changes to the capital gains and negative gearing has sailed through the House of Representatives, where Labor holds the majority vote, unamended today.

The bill bundled the two changes with the $250 tax offset and $1000 instant tax deduction.

Chalmers made a last-minute pitch for the first-in-a-century changes, which the government has tried to sell as a way to address about a decade of decline in home ownership.

“The legislation before the parliament today will make it easier for first-home buyers. It will cut taxes for more than 13 million Australian workers, and it will make tax time simpler,” he told reporters.

“Today is a big test for the Coalition, but we already know that they will fail it. They have voted against tax cuts before, and today the Coalition will vote against tax cuts once again.”

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Opposition Leader Angus Taylor said he supported the tax deductions but accused the treasurer of tying them to the controversial changes to the capital gains tax and negative gearing.

“These cost-of-living measures could have passed this parliament easily with bipartisan support, but tricky Labor, the tricky treasurer, has deliberately tied these measures to its toxic taxes using a single piece of legislation,” he told the chamber.

“They could’ve put forward separate bills, one bill for tax cuts and one bill for tax increases, but they didn’t.”

Taylor ruled out support and instead moved amendments to remove the capital gains and negative gearing from the bill and pass a bill to tackle bracket creep – both of which were voted down by Labor.

Labor’s tax reform bill will likely pass the House of Representatives later this afternoon but will need the support of the Greens to pass the Senate when parliament resumes on June 22.

The Greens have raised concerns about ministerial discretion within the legislation that could open the door for the treasurer to make further changes after the bill is law.

“It is a concern to the Greens and it is something we want to explore in the upcoming inquiry,” Greens Senator Nick McKim told reporters.

Independent MPs and senators have similarly raised issues with the sweeping nature of the reforms.

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Independent Senator David Pocock called for the Senate to “do its job” and split the bill when it comes before the upper house later this month, allowing the capital gains and negative gearing changes to be scrutinised through an inquiry.

“The case hasn’t been made, and the details haven’t been sorted out, and it’s not good enough for a government to basically say let’s ram this through parliament and the treasurer will just make rules down the track and sort things out,” he told reporters.

“The senators elected to actually make sure that we get it right.”

An inquiry, which was launched after the bill was introduced to parliament last month, will examine the impacts of changes to the capital gains and negative gearing over the coming months.

Chalmers has said the federal government will engage in broad consultation with all businesses about the changes ahead of when the second tranche of legislation, containing the details of the changes, are introduced to parliament later this year.