Capital gains tax changes are already having an impact on wealth inequality – and vested interests are running scared | Greg Jericho
Guardian AU
•Wed, 24 Jun 2026 15:00:48 GMT
📰 What Happened
Economist Greg Jericho argues that the Albanese government's proposed changes to the capital gains tax (CGT) discount are already having a tangible impact on wealth inequality and the housing market, even before becoming law. Weekend house auction results and official taxation data, Jericho writes, reveal that the arguments from outraged conservatives are hollow. He appeared before a Senate committee into the tax changes as chief economist for the Australia Institute, reiterating his research showing that the 50% CGT discount was "ground zero of the housing affordability crisis." Opposition finance spokesperson Claire Chandler challenged this assertion during the hearing, arguing that deregulation of the banking system, RBA inflation targeting, and Basel accords played a bigger role. However, Jericho counters with data showing that dwelling prices remained stable for decades before the CGT discount was introduced, supporting his claim that the discount is the primary driver of housing unaffordability.
🔍 The Backstory
The Albanese government has proposed reducing the capital gains tax discount from 50% to 25% as part of broader housing affordability reforms, also including changes to negative gearing. The policy has faced fierce opposition from the Coalition, property industry groups, and some investors who argue it will distort the housing market and reduce investment. The Senate committee hearings were part of the legislative process. The CGT discount was introduced in 1999 under the Howard government, allowing property and asset investors to pay tax on only half of their capital gains if they held assets for more than 12 months. Economists have long debated its impact on housing affordability, with many arguing it incentivises property speculation and inflates prices.
🎯 Why It Matters
This analysis provides early evidence that the CGT changes may already be moderating housing market behaviour, challenging claims that they will have no effect or will harm the market. If correct, it suggests tax policy can be an effective tool for addressing housing affordability — one of Australia's most pressing economic and social issues — and that political opposition to such reforms may be driven more by vested interests than evidence.
Economist Greg Jericho argues that the Albanese government's proposed changes to the capital gains tax (CGT) discount are already having a tangible impact on wealth inequality and the housing market, even before becoming law. Weekend house auction results and official taxation data, Jericho writes, reveal that the arguments from outraged conservatives are hollow. He appeared before a Senate committee into the tax changes as chief economist for the Australia Institute, reiterating his research showing that the 50% CGT discount was "ground zero of the housing affordability crisis." Opposition finance spokesperson Claire Chandler challenged this assertion during the hearing, arguing that deregulation of the banking system, RBA inflation targeting, and Basel accords played a bigger role. However, Jericho counters with data showing that dwelling prices remained stable for decades before the CGT discount was introduced, supporting his claim that the discount is the primary driver of housing unaffordability.
The Albanese government has proposed reducing the capital gains tax discount from 50% to 25% as part of broader housing affordability reforms, also including changes to negative gearing. The policy has faced fierce opposition from the Coalition, property industry groups, and some investors who argue it will distort the housing market and reduce investment. The Senate committee hearings were part of the legislative process. The CGT discount was introduced in 1999 under the Howard government, allowing property and asset investors to pay tax on only half of their capital gains if they held assets for more than 12 months. Economists have long debated its impact on housing affordability, with many arguing it incentivises property speculation and inflates prices.
This analysis provides early evidence that the CGT changes may already be moderating housing market behaviour, challenging claims that they will have no effect or will harm the market. If correct, it suggests tax policy can be an effective tool for addressing housing affordability — one of Australia's most pressing economic and social issues — and that political opposition to such reforms may be driven more by vested interests than evidence.