It’s no secret that the Albanese Labor government has been eyeing a cut to Australia’s once sacrosanct 50% capital gains tax (CGT) discount on property owned for over 12 months.
Given that previous federal governments have – after some deliberation – been too scared to fall foul of the electorate by tampering with CGT – you may well ask why it’s now back on the drawing board?
In case you hadn’t heard, a Senate inquiry is currently examining the CGT discount, and a final report is now due by 17 March 2026.
With 90% of benefits flowing to the top 20% of income earners, Canberra’s policy wonks will tell you that slashing the CGT discount will reduce inequality embedded in the current tax structure.
Budget cash grab
But putting the moral high ground aside for a moment, modelling by the Grattan Institute suggests reducing the discount to 25% could raise about $6.5 billion annually.
This explains why Treasurer Jim Chalmers has got the CGT tax in his sights; The 50% CGT discount is projected to cost the federal budget approximately $247 billion in forgone revenue over the next decade.
Industry groups and some economists are vocal in their cautioning of unintended consequences associated with taking a scalpel to the CGT tax discount.
However, Chalmers and Co could be drawing inspiration from a new wealth tax in the Netherlands that’s left global investors wondering if global appetite for this new tax might spread like the proverbial Dutch elm disease.
Dutch manoeuvres
Last month, the Dutch parliament voted to introduce an annual 36% CGT on any increase in the value of their stock, bond or crypto investments, even if they have not sold the asset and realised the gain.
Admittedly, the tax already existed before this vote.
However, instead of taxing personal unrealised gains, the authorities simply taxed everyone as if they had made an identical gain, and in 2026, the assumed rate of gain is around 7.8%.
In other words, even if [Dutch] investors only make money on paper and don’t sell, they will still have to find cash for the tax collector.
Taxing unrealised gains has typically been regarded as political suicide, and having come to that conclusion last October, Australian Prime Minister Anthony Albanese vetoed plans by his treasurer, Chalmers, who was hell-bent on taxing unrealised capital gains in superannuation funds.
Having heeded critics’ warning - that taxing unrealised gains would force the sale of illiquid assets like farms or commercial property – the Albanese government decided that the tax would only apply to realised earnings - dividends, interest, and profits from sold assets – in other words, business as usual.
Dumb reform
Having second-guessed current investor appetite for tax reform, the Canada-based founder of ecommerce platform Shopify recently told his cohort on X that the Dutch proposal was “the dumbest thing any government on planet earth is pursuing right now".
“The entire legislature of [the] Netherlands failed a very public IQ test in front of the entire world. Pathetic,” he later noted.
Whether the consequences are intended or not, the proposal will, by default, hit people with volatile investments like cryptocurrency.
On the day the tax is calculated, the value of an investor’s crypto holdings might have doubled in a year.
But by the time they get their tax bill, the crypto price might have slumped again.
As a result, they would be forced to sell some of their holdings at a loss, to pay tax on a gain they never realised.
“The Dutch communist government is making us fund our own destruction by taxing us [on] money we never even made,” said Eva Vlaardingerbroek, a Dutch far-right activist.
Wealth tax by any other name
Unsurprisingly, 50,000 Dutch people were quick to sign an online petition demanding their parliament’s lower house rethink their need to impose hat they see as a wealth tax by any other name.
While most countries with a wealth tax levy it on people’s total wealth, what the Dutch government now appear to be targeting - and at a much higher rate – is an annual increase in their wealth.
Whether this has opened the door for other left-wing governments to follow suit remains to be seen.
In the UK, the Green Party has openly advocated a wealth tax, while Rachel Reeves, the chancellor, has ruled out a “standalone wealth tax”, while many of Labour’s backbenchers support it.
Meanwhile, here in Australia, no formal legislation has been introduced to cut the CGT discount.
But the chatter to actively consider it ahead of the May 2026 Federal Budget is growing.
While Chalmers has not formally committed to a cut, he has recently declined to rule it out and confirmed that Treasury is modelling various options ahead of the May 2026 federal budget.
This has led to widespread expectation of a reform announcement in the upcoming budget.
