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Thursday, 23 September 1999
Page: 10394

Mrs GALLUS —My question is addressed to the Treasurer. Treasurer, will you advise the House of the government's substantial reforms to the capital gains tax, as announced as part of the new business tax system?

Mr COSTELLO (Treasurer) —I thank the honourable member for her question. As members of the House would be aware, the government announced during the week the first overhaul of Australia's capital gains tax system. This has the opportunity to cut capital gains tax by half for all individual taxpayers. It means that taxpayers who elect to go into the new system after 30 September 1999 get the option to pay capital gains tax at half the rate.

I saw some commentary in the paper today from ACOSS saying that this was too generous and, on the other hand, I saw some commentary from the Real Estate Institute saying that it was too tough. I want to make it entirely clear that the changes involve a trade-off. For those people who elect to go into the half-rate system, it will be on the nominal gain; there is a trade-off for indexation and averaging. For those people who want to keep the benefit of indexation, they keep that benefit until 30 September but will have to pay at the full rate in relation to gains.

Yesterday the New South Wales Treasurer, Mr Egan, said—and I recommend this to members of the Labor Party; he is one of its own Treasurers—to the Legislative Council:

I do not often do this and I do not expect I will do it often in the future, but on this occasion I would like to give the Federal Government and . . . the Commonwealth Treasurer, high marks: somewhere between a credit and a distinction. The New South Wales Government welcomes the Commonwealth's response to the final report of the review of business taxation.

No wonder we have this constant baying from the Labor Party frontbench. It is yet to take a position in relation to business taxation. These changes to capital gains tax are due to start on 30 September, and people will be making decisions from 30 September on the basis of this new taxation system.

Either Labor can follow the lead of Mr Egan and endorse the package, in which case people will know, and there will be certainty in relation to the taxation system, or Labor can continue to search around looking for an opportunistic or populist issue to try to avoid the crunch. I commend Mr Egan's comments to them:

The New South Wales Government welcomes the Commonwealth's response to the final report of the review of business taxation. It believes that the changes proposed by the Commonwealth will, overall, have a favourable impact on business in Australia and, as a consequence, jobs growth.