The capital gains tax debate needs a super-sized reality check
Instead of treating tax reform as the only thing worth talking about, we should focus on why our enormous savings pool isn’t flowing to great founders.
For the second time in as many years, Australia’s venture capitalists have filled the nation’s column inches with warnings that tax changes will imperil the country’s future. It’s a striking contrast to the confidence and optimism they typically project about their portfolio companies.
In this case, their concern is misplaced and their perspective too narrow.
The strongest version of their argument has legs: if we reduce the after-tax rewards for risk-taking, founders may take fewer risks or build their businesses overseas. But that debate has distracted us from a far bigger question: how do we make Australia the best place to build in the first place?
That is especially critical because, thanks to our superannuation system, Australia holds one of the world’s largest pools of savings. Too little of it, though, reaches the early-stage companies that need it.
Instead of treating tax reform as the entire innovation debate, we should focus on why our enormous savings pool is not flowing to great founders. The government’s proposed overhaul of the super performance test will fix part of this. But there is still much more to do.
