Updated January 30, 2026 — 3:12pm
Treasurer Jim Chalmers has positioned tax reform as a central focus in his upcoming budget, aiming to tackle intergenerational inequities exacerbated by Australia’s challenging property market. The inability of young Australians to afford homes has become a critical issue, prompting Chalmers to advocate for comprehensive changes.
In a recent interview with Nobel Prize-winning economist Joseph Stiglitz for The Monthly magazine, Chalmers expressed the government’s eagerness for reform, emphasizing a methodical approach to ensure lasting impact. “We are impatient but not impetuous,” he stated, underscoring the need for clear communication of any proposed tax changes.
Economic Pressures and Budgetary Challenges
Chalmers is set to deliver his fifth budget in early May, amid mounting pressure to curb inflationary trends that could prompt the Reserve Bank to raise interest rates. The budget also aims to boost productivity growth, which has stagnated since the onset of the pandemic.
Last year’s budget introduced modest personal income tax cuts, yet the government’s reliance on these taxes has sparked calls for reforms reminiscent of those during the Keating and Howard eras. Chalmers has already implemented several tax changes, including adjustments to the stage three tax cuts and reforms to the petroleum resource rent tax, but acknowledges more work lies ahead.
Intergenerational Fairness and Housing Affordability
Chalmers highlighted the importance of intergenerational fairness in tax reform, particularly for working Australians. “We want to attract more investment and simplify the system,” he explained, acknowledging public desire for further action.
An upcoming intergenerational report will further examine the long-term fiscal and economic landscape, with housing costs identified as a pivotal issue. Chalmers noted that rising property prices have fueled discontent among younger generations, who feel disadvantaged compared to their parents.
“This idea that a lot of young people have in our societies, and not unfairly, that they are not getting the same deal that their parents had. I think that’s what’s driving a lot of the understandable angst that we see in our politics,” he said.
Capital Gains Tax and Public Sentiment
A Senate inquiry initiated by the Greens has received numerous submissions advocating for changes to the capital gains tax (CGT), particularly the 50% concession on assets held for over a year. Although Chalmers refrained from committing to specific changes, he acknowledged the ongoing debate surrounding the tax system’s impact on housing.
“We listen respectfully to people when they put those views to us,” Chalmers remarked, indicating openness to public input while maintaining a cautious stance.
Looking Ahead: Budgetary Outlook and Economic Strategy
Chalmers hinted that the forthcoming budget would build on insights from the 2025 economic roundtable and Productivity Commission reports aimed at enhancing Australia’s economic capacity. He suggested the government might replicate the public engagement strategy used for the stage 3 tax cuts in early 2024 as a model for future reforms.
Recent Finance Department data indicates a promising fiscal outlook, with income tax collections surpassing expectations. In the first half of the 2025-26 financial year, the government collected $170.3 billion in income tax, a 10% increase from the previous year.
The figures suggest income tax collections from ordinary workers are running at least $10 billion stronger than Treasury had expected in December, partly due to a robust jobs market with the unemployment rate easing to 4.1%.
As Chalmers prepares to unveil the budget, the focus remains on balancing immediate economic challenges with long-term strategic goals, ensuring that tax reform addresses both current and future needs.
