Is tax reform even possible anymore?

Patrick, what was the government trying to do? What did it say it was trying to do in the budget?

Well, it was trying to make it easier for people to own their first home.

That was a big selling point.

They were trying to cut taxes for workers, and that was part of the overall deal as well.

And to get there, they were going to better align the tax treatment of asset and labour income.

So the money you make from working and the money you make from selling assets, selling a property, selling shares, to make sure that the tax treatment of the two was more fair.

So you had been taxed on only half of each capital gain.

If you bought something at one price, sold it later at another, you'd been taxed on only half of the gain.

What's the change they tried to put in place?

Effectively, what they want to do is they want to make sure that they are taxing you on the real gains from the sale of your assets rather than the nominal.

So it should be a more nuanced, a more exact way to tax capital gains.

That's not the only change they made.

And, of course, they did that because there were a lot of investors diving into housing and, I suppose, elbowing owner-occupiers out at auctions and so on.

The other change they made was to impose a minimum tax of 30% on real gains.

What was the thinking behind that?

They're trying to treat the income from capital and wages equally again, and they're trying to avoid people selling assets at a time when their income is very low.

So usually, you know, when you hold on to your investment property or properties, for example, for a number of years, and then you don't sell it until you've finished work when your income is very low.

So they're trying to address that.

It looks as if their political mistake was not to stop at housing.

They applied these measures to all assets, including shares and including start-ups.

And that's been the source of most of the criticism, those headlines I read out.

Why do you think they didn't

simply stop at housing? You don't want people making decisions around, oh, I'll invest in shares rather than property because I can get a better tax deal on shares.

They don't want to get into this situation where they are distorting decisions based on tax.

They want people to make the decision based on what they think, you know, is the best place to invest their money.

Patrick, what was the government trying to do? What did it say it was trying to do in the budget?

Well, it was trying to make it easier for people to own their first home.

That was a big selling point.

They were trying to cut taxes for workers, and that was part of the overall deal as well.

And to get there, they were going to better align the tax treatment of asset and labour income.

So the money you make from working and the money you make from selling assets, selling a property, selling shares, to make sure that the tax treatment of the two was more fair.

So you had been taxed on only half of each capital gain.

If you bought something at one price, sold it later at another, you'd been taxed on only half of the gain.

What's the change they tried to put in place?

Effectively, what they want to do is they want to make sure that they are taxing you on the real gains from the sale of your assets rather than the nominal.

So it should be a more nuanced, a more exact way to tax capital gains.

That's not the only change they made.

And, of course, they did that because there were a lot of investors diving into housing and, I suppose, elbowing owner-occupiers out at auctions and so on.

The other change they made was to impose a minimum tax of 30% on real gains.

What was the thinking behind that?

They're trying to treat the income from capital and wages equally again, and they're trying to avoid people selling assets at a time when their income is very low.

So usually, you know, when you hold on to your investment property or properties, for example, for a number of years, and then you don't sell it until you've finished work when your income is very low.

So they're trying to address that.

It looks as if their political mistake was not to stop at housing.

They applied these measures to all assets, including shares and including start-ups.

And that's been the source of most of the criticism, those headlines I read out.

Why do you think they didn't

simply stop at housing? You don't want people making decisions around, oh, I'll invest in shares rather than property because I can get a better tax deal on shares.

They don't want to get into this situation where they are distorting decisions based on tax.

They want people to make the decision based on what they think, you know, is the best place to invest their money.