Tax systems aren't meant to be popularity contests, or we'd never change anything

To claim an idea as popular, support for it needs to reach at least 50% – unless you’re talking about tax. Public support for systemic changes to the taxation system rarely reach that benchmark.

Tax reform doesn’t have the easy popularity of cheaper petrol, or Collingwood losing a grand final by one point. Proper debate on tax requires nuance, and public commentary on tax is where nuance goes to die. Systemic tax change is complex, often technical, and easy for opponents to craft as personally negative – even to people who it would never affect, or worse, those who it could help.

Polling since the federal budget has put approval for reforms to the capital gains tax discount (CGT) at 35% with 44% undecided/neutral. Pundits have called this a resounding failure on the part of the Government to persuade the public about the policy. Only 21% of respondents were originally opposed to the changes.

But treating 35% support for meaningful tax reform as a ‘crisis of legitimacy’ is political spin that ignores history.

Consider the actual policy for proposed adjustments to capital gains tax concessions, negative gearing arrangements, and discretionary trust structures. Each of these measures targets long-standing features of the system that disproportionately benefit asset holders and high-income households.

Despite this, industry groups warn of ‘market distortion’. Property investors have forecast rent spikes. Political opponents have framed the changes as an attack on aspiration itself.

Opponents to these changes have flooded the debate with strategic and unnecessary complexity. Personal circumstances, especially statistical outliers are also used to show the potential ‘unfairness’ to cohorts of society largely unaffected by the changes.

In a post on X, Emily the AI-generated Woolworths casual employee was concerned about impacts of future profits to her share portfolio.

As ludicrous as Emily-style commentary is, the strategy has seen some success. Some young first-home buyers, those who arguably benefit most from the changes are instead focussing on an inability to game the system in the same way their parents did – a system they will never enter unless something (like the proposed tax reforms) gives them a fighting chance.

If people are searching for a tax policy to hate, look no further than the GST. When originally floated in the 80s, opposition to a GST consistently polled at over 50% with support for it in the mid to high 20s. This was despite some polls framing the GST question as could you support the GST if it came with a reduction in the income tax you paid.

The polls jumped around, but by May 1998 when Newspoll survey asked:

“Thinking now of a consumption tax on goods and services are you personally in favour or against the introduction of a consumption tax in Australia?”.

The response was 38% in support, 44% in opposition and 18% undecided. Political historians argue the toss over how many seats this cost the Howard Liberal Government who were returned to parliament with a reduced majority in October of that same year.

The point I want to emphasise is that by any measure, opposition in the mid 30s to a proposed change to our tax system that doesn’t include a reduction in income tax and takes away a benefit people have grown to feel entitled to is not historically significant, nor a political albatross.

It is also important to remember that despite how scary vested interests might make them out to be, these changes will help many more people than they hinder.

If house prices flatten out lots of first home buyers will be able to get into the housing market. While a small number of wealthy people will pay a bit more tax.

What is getting lost in the noise is the basic point: tax systems are not meant to be popularity contests. They are meant to be coherent, adaptable, and capable of funding public goods without unduly entrenching inequality. If we only pursued reforms that polled like a footy grand final victory lap, we would never change anything at all.

Leanne Minshull is co-CEO of the Australia Institute