Small business owners to target Labor MPs, warning of higher unemployment under capital gains tax changes

An army of mums and dads running shops are set to target nervous Labor backbenchers over Budget plans to double capital gains taxes on small businesses that weren’t taken to the last election. Treasurer Jim Chalmers has made a virtue of abolishing the 50 per cent capital gains tax discount in a bid to make residential property market speculation less attractive to future investors. But this change, imposing a minimum 30 per cent tax on capital gains, also includes a top 47 per cent tax on businesses when they sell or are listed on the share market. That’s double the existing 23.5 per cent ceiling now, which Small Business Australia executive director Bill Lang said could cause unemployment to rise as fewer prospective entrepreneurs saw the upside in taking a financial risk working for less than the average wage. “If there’s less people with an incentive to do that, longer term, they’ll be less jobs created in the economy of the future,” he told The Nightly. Mr Lang heads a group representing 350,000 small business families but says 2.6 million small business operators across Australia could effectively lobby Labor MPs to convince the Federal Government to back down on some contentious aspects of its proposed capital gains tax changes. “In terms of the communications we’re already getting from the people that we reach, ‘Contact your local MP, help them understand what the implications are going to be in that local community where you’re employing local people’,” he said. “There are five million Australians that earn their income from working in the small business sector, so that’s both owners and employees. “We would hope they would start to take seriously the concerns of those people.” Small business owners are also putting AI-generated memes on Facebook, with images of Prime Minister Anthony Albanese meeting the likes of cafe owners, to highlight how Labor hadn’t taken this policy to the last election. This could also further erode trust in a Government re-elected only a year ago with a landslide majority. Wilson Asset Management founder Geoff Wilson, who manages $6 billion in assets for 130,000 investors, is gearing up for a long campaign against a doubling of capital gains taxes on businesses that are sold within 15 years of starting, often by younger entrepreneurs. “With our campaign, we’ll run it until the policy’s changed, whether that means two years, a change of government or longer,” he told The Nightly. “We’re prepared to fight this, to run this campaign, for three, four, five years.” Mr Wilson last year successfully campaigned against Labor’s plan to tax unrealised superannuation gains and in 2019 destroyed the ALP in Opposition when it proposed to get rid of franking credits for retiree shareholders. “If they don’t significantly repeal this, the Labor Government will lose the next election,” he said. In a sign of what’s to come, shadow treasurer Tim Wilson said the Government had “declared war on the self-starters and small businesses of this nation” as he launched the Opposition’s Stand with Small campaign. “We need new economic structures to empower people for the 21st century,” he told the National Press Club in Canberra on Wednesday. With the Coalition a diminished force politically, Labor has the numbers to get its controversial tax plan through the Senate with only help from the Greens. Labor has the numbers to get its controversial tax plan through the Senate with only help from the Greens. But Peter Burgess, the chief executive of the Self-Managed Super Fund Association, said the Government could change its mind if enough Labor backbenchers in marginal seats raised concerns in caucus, following a concerted lobbying campaign. “They’re going to be critically important. They need to ensure they’re listening to the concerns of their constituents and a critical part of that is making sure they’ve properly considered the broader impacts of what’s being proposed here,” he said. Mr Burgess last year helped defeat Labor plans to tax the unrealised gains on superannuation balances above $3 million before assets had been sold, despite Labor winning a resounding election victory with this policy. In this instance, Labor backbenchers were also lobbied, along with crossbencher senators Jacqui Lambie and David Pocock who no longer share the balance of power in the upper house of Parliament. “The crucial thing there was the backbenchers. Once the backbenchers were turned on the policy, that was significant and the way to do that was to show the backbenchers that the implications were much broader than what they initially thought,” Mr Burgess said. “We spend quite a bit of time talking to the independent senators, the crossbench, at that time making sure they were aware of the unintended consequences — it also helped to really distil it down to some really simple messages.” Dr Chalmers noted existing CGT concessions for small business will remain, including if a business is at least 15 years old or if the business owner is 55 or older. “Now, the thing that we’ve changed here — and I’ve seen this campaign about the 47 cents — what that completely ignores is that there’s still a discount in the CGT system, it’s just calculated differently,” the Treasurer told the ABC on Wednesday. Dr Chalmers and the Treasury Budget papers have promised to consult “early-stage and start-up businesses” over the capital gains tax proposal, which tech entrepreneurs are campaigning against. “Certainly, a backward step in incentivising Aussies to start a productive business,” Airtasker founder and chief executive Tim Fung said.