Gallagher defends CGT ministerial discretion powers as scrutiny intensifies

A senator has questioned a huge detail in the new tax laws that could see the Coalition, One Nation or Labor itself gut the proposed reforms.

Members of the crossbench, including the Greens, have lashed the breadth of Mr Chalmers’ ministerial discretion over the reforms.

These discretionary powers would give the Treasurer the final say over which asset classes will be hit by new CGT rules, as well as the definition of new builds central to the negative gearing changes.

They are contained within the legislation introduced by Mr Chalmers to House of Representatives, which is set to pass the lower house on Thursday.

Greens senator Nick McKim has scrutinised the extent to which the Treasurer has power to ‘walk back’ the tax reforms. Picture: NewsWire / Martin Ollman

Mr Chalmers has previously pointed out the powers are “disallowable” by the parliament and not “unusual” from standard practice.

On Thursday, Senator McKim asked Senator Gallagher, who was acting for the Treasurer during Senate estimates, whether the government was serious about its tax reform given the potential consequences of legislation’s proposed discretionary powers.

“Are you kidding me? Is that a serious question?” Senator Gallagher told the Senate Economics Legislation Committee.

“So, the last two weeks of commentary about our reforms to capital gains tax, you don’t think that’s real?”

But Senator McKim doubled down, asking if government had considered how a future Treasurer who “might be from the Liberal Party, or horrifically, a One Nation treasurer” might use the discretionary powers to walk back some or all of Labor’s reforms.

“I understand there’s going to be an inquiry on the (legislation), and there’s obviously officials who will be here later tonight that we can go through it in detail with,” Senator Gallagher said.

Finance Minister Katy Gallagher has branded claims Labor is unserious about its reforms as “laughable”. Picture: NewsWire / Martin Ollman

“My experience, being in the Senate, is that the Senate has not been shy about disallowing things that it doesn’t like.

“The parliament usually has a view about these things … but the idea that we’re not serious about reforming capital gains tax, negative gearing, and some of the other reforms to trusts, introducing a minimum 30 per cent tax rate.

“I think it’s laughable to sit here and suggest that we’re not taking this seriously.”

When pressed, Senator Gallagher insisted the powers were not about “walking back” the reforms.
“It is not unusual in complex legislation to have to have ministerial powers that usually have disallowance attached to them to deal with particular situations that might arise,” she said.

Earlier, Treasury Secretary Jenny Wilkinson was grilled on whether young Australians would be hit with higher taxes – due to the scrapping of the 50 per cent CGT discount – by opposition spokeswoman Claire Chandler.

Treasury Secretary Jenny Wilkinson says Treasury analysis has found most young Australians save for a deposit through salaries or wages. Picture: NewsWire / Martin Ollman

Ms Wilkinson said Treasury analysis suggested about 90 per cent of young people would face lower taxes as a consequence of the proposed changes.

“My understanding is that most young Australians earn most of their income through wages and salaries.

“If you’re trying to think about how most young Australians would save (in order) to place a deposit on a home, for example, most of that savings will come through wages and salaries.”

Ms Wilkinson’s response is implicitly addressing a key Coalition argument against Labor’s CGT changes, in which the opposition claims the changes will cripple young Australians building wealth through investment.

source: https://www.news.com.au/finance/economy/australian-economy/gallagher-defends-cgt-ministerial-discretion-powers-as-scrutiny-intensifies/news-story/918f54a1409d5afc9f0f5b01d4a815f7