Grassroots members of New South Wales (NSW) Labor are pushing for a comprehensive overhaul of the tax system, proposing measures that would significantly impact landlords, billionaires, and business owners. These proposed reforms are set to be discussed at the party's state conference this weekend before potentially being sent to federal Labor for consideration.
The Kensington and Beaconsfield Labor branch has called for a "big-picture, comprehensive, ambitious and meaningful tax reform package," urging federal Labor to commit to a new white paper on taxation across the federation. A key proposal from NSW Labor branches seeks to eliminate grandfathering protections for existing property investors, making them subject to future negative gearing reforms.
Other proposed changes include a phased reduction in the amount landlords can claim through negative gearing, decreasing it by 20 percentage points annually. The capital gains tax discount would also be gradually reduced by five percentage points each year, aiming for a minimum of 25 percent. The blueprint further suggests introducing a net wealth tax on billionaires and increasing council rates on small business properties.
However, Federal Labor Industry Minister Tim Ayres has stated that Prime Minister Anthony Albanese has no current plans to adopt these specific NSW proposals. Ayres emphasized that grandfathering protections for existing investors are a "very important principle," noting that individuals have made investment decisions based on the existing tax structure.
The NSW Labor branches are also advocating for reforms to negative gearing, suggesting that the proportion of losses deductible against salaries and wages should be reduced by 20 percentage points each year. They specifically state that "so-called grandfathering arrangements that would exempt existing investors and the rental properties they own from these reforms should not be allowed."
Federal Labor has recently made changes to tax policy. In its May budget, the party replaced the 50 percent capital gains tax discount with inflation indexation and a minimum 30 percent tax rate. Additionally, negative gearing was banned for future investors purchasing existing homes, while current investors retain the tax break under grandfathering arrangements.
Senator Ayres indicated his intention to address the proposals directly at the upcoming conference, stating, "We'll be very, very direct at the conference, don't you worry about that. I think we've set out an ambitious but important reform agenda."