A new campaign opposing Labor’s proposed capital gains tax (CGT) overhaul has launched, as backlash from and Coalition figures continues to grow following the federal budget.
NSW shadow minister for science and technology Jacqui Munro has launched the ‘#StopTheTechTax’ petition alongside federal shadow innovation minister Aaron Violi. The petition argues the proposed changes could push startups, talent and investment offshore.
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“This new Tech Tax will be devastating for Australian startups,” the petition’s website reads.
“[It is] yet another one-eyed approach from a government that talks about a Future Made in Australia, while simultaneously dismantling the structures that allow Australian-based innovation to get off the ground.”
The campaign comes after the Albanese government unveiled plans in the 2026-27 budget to replace the existing 50% CGT discount with a cost-based indexation model for assets held longer than 12 months, alongside a proposed 30% minimum tax on net capital gains.
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Under the proposed reforms, startup founders, early employees, and investors could face substantially higher tax bills if a company is sold or goes public.
“People bet their careers that in return for their sacrifice today, they will be rewarded through stock options when that startup becomes the next big tech success story. By axing the 50 per cent CGT discount, Treasurer Jim Chalmers has launched a direct attack on that incentive to innovate,” Violi told SmartCompany.
The broader reforms also include changes to negative gearing concessions and tax treatment for trusts, making the package one of the most politically contentious elements of the federal budget.
Shadow Treasurer Tim Wilson confirmed last week that the Coalition would repeal Labor’s proposed CGT and negative gearing changes if elected.
Startup and Coalition backlash grows over capital gains tax changes
The startup sector has reacted strongly to the CGT changes in particular, warning they could make startup equity and employee share schemes significantly less attractive.
Startup groups argue the changes disproportionately affect early-stage companies because founders and employees often rely on equity rather than large salaries, while fast-growing startups can generate gains that far outpace inflation.
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In an opinion piece on Startup Daily, Munro argued the reforms risk triggering “an unprecedented capital flight and brain drain” across the Australian tech sector.
She also echoed claims seen across the ecosystem over the past week that the changes could result in founders considering overseas markets. AI startups and software businesses in particular have been pointed to as being increasingly portable, making it easier for founders to relocate talent and operations overseas.
“I know personally that hundreds of founders are getting advice on whether setting up in New Zealand, or Singapore or the US is going to be better for business,” Munro wrote.
The government acknowledged the “unique characteristics” of startups and early-stage investment in the budget papers, saying it will consult on how the reforms interact with incentives for startup investment ahead of the planned July 2027 start date.
And in Question Time on Wednesday last week, Treasurer Jim Chalmers acknowledged that more needed to be done on the policy for startups
“We think you are a really important part of the economy, in lots of ways the hope of the side when it comes to dynamism and productivity, and we will reflect and recognise that in our policy,” Chalmers said.
The proposed reforms must still pass through parliament, with startup and VC groups now preparing submissions ahead of an expected Senate committee process involving crossbench senators, including David Pocock, Jacqui Lambie, Fatima Payman and Pauline Hanson.
“Smart policy encourages Australians to invest in productive ventures, not static assets. If mum and dad investors aren’t incentivised to put money into startups and innovation it will inevitably slow down jobs growth and economic development,” Munro said.
