Australians are rallying behind Treasurer Jim Chalmers’ potential plans to reduce capital gains tax concessions and negative gearing benefits, while also advocating for cuts in government spending, particularly in foreign aid, to facilitate personal income tax reductions. This sentiment was captured in an exclusive Resolve Political Monitor poll, which indicates strong political backing for such measures in the upcoming May budget.
The poll, conducted between February 8 and 14 with 1,800 respondents, reveals that two-thirds of Australians support spending cuts, with only 8 percent opposed. The savings from these cuts are expected to be redirected to the public through income tax reductions, although there is resistance to increasing the Goods and Services Tax (GST).
Chalmers’ Budget Strategy Amid Economic Challenges
Jim Chalmers has signaled his intention to use the 2026-27 budget to address inflationary pressures, enhance productivity, and reform parts of the tax system. The budget is projected to show a deficit of $34.3 billion. In a related development, the International Monetary Fund has advised Chalmers to pursue extensive tax reforms, including overhauling capital gains tax (CGT), reducing the company tax rate, and increasing the GST.
According to the poll, half of the respondents support income tax cuts, with opposition at just 11 percent. Support is notably strong among high-income earners (58 percent), Coalition voters (55 percent), employed individuals (57 percent), and Labor supporters (51 percent).
Public Opinion on Tax and Spending Adjustments
When asked about potential measures to finance personal income tax cuts, 66 percent of respondents favored spending cuts, 58 percent supported higher taxes on banks, and 57 percent endorsed increased taxes on mining companies. Notably, 40 percent backed a reduction in capital gains tax concessions, with only 17 percent opposed. A significant 42 percent remained undecided or neutral, indicating potential for Chalmers to advocate for changes to the concession introduced in 1999.
The Liberal Party, however, has expressed opposition to altering capital gains tax, with leader Angus Taylor affirming his commitment to income tax reductions. “We will come forward with a strong, lower tax package that absolutely must be what we take to the next election,” Taylor stated at the Centre for Independent Studies.
Negative Gearing and GST: Divisive Issues
There is even stronger public support for cutting negative gearing concessions on investment properties, with only 17 percent opposing changes. Conversely, increasing the GST is largely unpopular, with 54 percent of respondents against it and only 18 percent in favor.
Chalmers has clarified that the government does not support a GST increase, though he remains open to reforms in capital gains tax. Discussions are reportedly underway for a reduction in CGT concessions as part of a broader tax reform strategy, which may include further income tax cuts.
Spending Cuts: A Path to Fiscal Stability
Nearly half of the poll respondents advocate for reducing government spending to improve the budget’s bottom line, up from 41 percent in the previous year. Cutting foreign aid is particularly popular, with 53 percent in favor, including strong backing from One Nation voters (76 percent), Coalition supporters (54 percent), and Labor voters (49 percent). The government plans to allocate $4.2 billion to foreign aid within a budget totaling $785 billion in expenditures.
Foreign aid was the only option to receive majority support for cuts. Meanwhile, 29 percent of respondents supported reducing the government’s $5 billion renewable energy programs, with the highest support among One Nation voters (49 percent) and the lowest among Greens voters (13 percent).
Implications and Future Directions
While there is some support for cuts to unemployment benefits, which cost taxpayers over $17 billion annually, the appetite for reducing major budget items is limited. Only 5 percent support cuts to the age pension, the second-largest budget item, and just 16 percent back reductions in state assistance, the largest federal expense.
The findings underscore a complex landscape for Chalmers as he prepares the budget. Balancing fiscal responsibility with public demand for tax cuts and targeted spending will be crucial in shaping Australia’s economic future.
As the debate continues, Australians will be closely watching how these proposed changes unfold and impact the broader economy and their personal finances.
