PBO says unrealised capital gains will slug taxpayers almost $7bn a year within 10 years

Labor’s tax on unrealised capital gains will slug taxpayers for almost $7bn a year within 10 years, new numbers from the independent Parliamentary Budget Office show.

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Labor’s tax on unrealised capital gains will slug taxpayers for almost $7bn a year within 10 years, new numbers from the independent Parliamentary Budget Office show, as former chair of one of Australia’s biggest industry superannuation funds, QSuper, Karl Morris says the ALP plan will be a disaster for investment.

Anthony Albanese confirmed in an interview at the weekend that Labor was committed to bringing in unrealised capital gains tax without indexation, which would eventually see more than 500,000 superannuants hit with up to 30 per cent tax on the growth in value of assets they have not even sold.

Taxpayers will be hit with a $5.5bn bill over the forward estimates and almost $40bn over the medium term according to the PBO, which has costed the ­Coalition’s policy to scrap Labor’s unrealised capital gains tax plan.

The tax will raise just $300m in government revenue in its first year, but suddenly grow to more than $2.4bn by its fourth year, and almost $7bn a year within 10 years, the PBO estimates.

Former QSuper chair Karl Morris Labor’s introduction of unrealised capital gains tax would be a policy ­mistake. Picture: Glenn Hunt/The Australian

Mr Morris, who presided over a near doubling in size of QSuper during his tenure, said Labor’s introduction of unrealised capital gains tax, regardless of who would be the first to be hit by that tax, would inevitably affect more ­people and would be a policy ­mistake.

“Taxing unrealised gains is a new retrospective tax; how can anyone who has worked hard, saved and invested well – so as not to go on a government-supported pension – plan for retirement when the tax and rules keep changing for the worse?” he said.

“It is totally ill conceived. How does anyone with illiquid assets like a rental property, farm, or any long-term investments like infrastructure manage short-term market movements?”

Business leaders have denounced Labor’s plans to proceed with the tax, saying that it would be a “Trojan horse” for the government to tax paper gains across multiple assets, structures and income brackets.

CSL chairman Brian Mc­Namee doubled down on his criticism last week, saying the Prime Minister’s attempt to play down the impact at the weekend meant this had now become a “matter that should not rest”.

“In my experience, these things never stand still … the net only gets wider and broader for all new taxes,” he said.

Mr Morris said: “This type of tax will force superannuation funds into cash, when the right thing is to invest in longevity assets that will now be sold or gain a much smaller investment going forward.”

CSL chair Brian McNamee. Picture: NewsWire/Andrew Henshaw

Moelis local boss Andrew Pridham.

Other prominent business leaders including Sydney Swans chairman and Moelis local boss Andrew Pridham have spoken out about the tax, which could see up to $25bn pulled from self-­managed super funds this year, leaving a funding drought for small and medium sized com­panies.

As polls point to a Labor win on Saturday, a growing number of business leaders have started to ­realise that Jim Chalmers and Mr Albanese are full steam ahead with the tax plan and may not need as many minor party votes to successfully pass legislation.

The Prime Minister ruled out lowering the threshold value of superannuation accounts at which point the unrealised capital gains tax would kick in, but did not rule out leaving the tax unindexed.

Peter Dutton and opposition Treasury spokesman Angus Taylor say they will not bring in such a tax, but have started campaigning harder on the issue only since business leaders have had the courage to speak up. “Anthony Albanese promised before the last election ‘We have no intention of making any super changes’,” Mr Taylor said.

“This tax is a broken promise. This is a wealth tax on Australians’ retirement savings.

“Jim Chalmers must be clear in his costings: will he ditch this tax, raise more debt, or cut a deal with the Greens to increase taxes on unrealised capital gains even ­further? If he doesn’t come clean on his plans, his costings have no credibility.”