Treasurer promises ‘ambitious’ tax-reforming budget

Jacob Shteyman and Zac de Silva | March 19, 2026

Changes to the way capital gains and businesses are taxed are on the cards, as Treasurer Jim Chalmers promises more reforms to level the playing field for younger generations and drive stronger investment.

While the extent of the reforms announced in May will depend on how much the government can afford and global developments, Dr Chalmers’ fifth budget will be full of ambition, he will promise in a speech on Thursday.

His pledge comes amid reports Treasury is drawing up changes to the capital gains tax discount, negative gearing, trusts and tax exemptions for electric vehicles. 

Uncertainty caused by conflict in the Middle East has only heightened the need for reform, Dr Chalmers will say.

“Any reform would be guided by some clear principles,” he will tell a gathering of business economists in Melbourne.

“Firstly, we recognise an outdated tax system is weighing on the opportunities faced by younger Australians and future generations. So any changes would have a substantial focus on our intergenerational responsibilities. 

“Second, we are focused on better incentivising productive business investment, if we can afford to.  

“And third, making the system simpler and more sustainable.”

The three principles are the same Dr Chalmers said would guide his thinking on tax reform following his August 2025 economic roundtable.

A Greens-led parliamentary inquiry into the capital gains tax discount found the measure unequally benefited wealthier Australians, skewing the market towards investors at the expense of owner-occupiers.

Labor senators Ellie Whiteaker and Richard Dowling, who signed off on the report, added that younger Australians increasingly faced different economic circumstances to previous generations.

Advocates for ambitious changes, including independent MP Allegra Spender and a raft of economists, have told AAP the 2026 budget will be the government’s best opportunity for tax reform in decades, because of Labor’s massive parliamentary majority and the long period until the next federal election.

Dr Chalmers will also use his speech to warn of “hard decisions” in the budget as he seeks to balance economic productivity, reform and helping the nation ride the wave of uncertainty driven by the war in the Middle East.

“The conflict in the Middle East is a stark reminder of how quickly the global economic outlook can change,” he will say.

“It is adding to inflation risks, weighing on growth, and increasing already elevated uncertainty. 

“But it is also a stark reminder of why addressing our three key economic challenges is so urgent. 

“All this economic uncertainty and volatility is a reason for more reform, not less.”