The Taxman Cometh

By John Ogilvie

In the weeks since Treasurer Jim Chalmers delivered the 2026 Federal Budget, one meme has cut through the spin more effectively than any press release or talking point.

Thanks to AI, Australians have been treated to a steady stream of images showing Anthony Albanese as the new co-founder of small businesses and startups across the country, complete with the Prime Minister taking a relaxed 47% stake while contributing little beyond a tax bill.

The meme is crude, but it has landed because it captures something real. The government has framed its changes to negative gearing and the capital gains tax discount as a long-overdue fix for the housing market. At first glance, this makes sense. For a long time, the tax system has incentivized aggressive investment in the housing market above all other assets. This has almost certainly contributed to housing prices going through the stratosphere in recent years. Young people are feeling the squeeze, and so some reforms to ease the rapid growth in housing prices are welcome. Were Chalmer’s changes to CGT only about housing, it’s likely that the budget would have received a much warmer reception.

The problem is that it’s a lie.

The reforms do not apply only to property. They reach into shares, businesses, crypto, and other productive assets. If the goal was truly to improve housing supply and affordability, there would have been no need to drag every other form of investment into the net. The changes are about raising more revenue from people who have already taken risks and created value. Housing was simply the most politically convenient justification on offer.

This budget also tells us something important about how Labor now thinks about the economy. Rather than focusing on policies that would expand opportunity, encourage investment, and grow the overall pie, the government has chosen to extract more from the existing base. A bloated public sector needs funding, and the path of least resistance (at least for the big government idealogues in Canberra) is to tighten the screws on those already generating activity and employment. The result is a system that treats success as a problem to be managed rather than an outcome to be rewarded. Geoff Wilson put it well in the AFR . When capital gains on productive assets face a higher effective tax burden, the signal to investors and entrepreneurs is clear: the reward for building something valuable just got smaller.

What has been most striking is not the policy itself, but the reaction it has provoked. For years, many small business owners and entrepreneurs in Australia preferred to keep their heads down when it came to politics. They focused on running their operations, employing people, and navigating whatever rules were thrown at them. Talking about politics in any negative way was dismissed as “whining.” That reluctance appears to be shifting. The same tools that make modern business possible, particularly AI, are now being used to push back. The viral memes, the parody content, and the direct commentary from founders who would once have stayed silent represent more than online noise. They signal a cultural change. People who create jobs and take financial risks are increasingly willing to say, publicly and creatively, that the current direction is hostile to the very activity the country claims to need.

The backlash has also had an invigorating effect on the opposition. One Nation has raised over $3 million in just two days, and the Liberals have responded with what is arguably their strongest policy proposal in recent memory: a commitment to permanently index income tax brackets to inflation. Bracket creep has quietly become one of the most insidious features of the tax system, dragging more Australians into higher brackets without any real increase in living standards. By making indexation a centerpiece of their budget reply, the Coalition has finally offered a concrete, pro-growth measure that speaks directly to working Australians and small business owners. It is the kind of policy that people have wanted to see from the Liberals for years. Better late than never.

Australia’s long-term prosperity has always depended on people willing to start things, employ others, and build assets that others can use. When policy starts treating those outcomes as primarily a source of additional tax revenue, it creates predictable consequences. Investment slows, risk-taking is discouraged, and the people who drive dynamism begin to look elsewhere or simply scale back their ambitions. And in today’s world, it is easier than ever for entrepreneurs and investors to take their ideas and capital to more business-friendly environments.

The question is whether the government will recognise the signal or simply dismiss it as the complaints of a few vocal critics. So far, the response has been defensive. The real test will come in whether future policy settings begin to reward growth and aspiration again, or whether the current approach of squeezing harder continues. For now, at least, more Australians are choosing to speak up rather than stay quiet. That shift, more than any single line in the budget papers, may be the most significant development of all.