Argument speech

"One step forward and two steps back, nobody gets too far like that." This line is by the Desert Rose Band

When will this government stop taking one step forward and two steps back? Another budget, another disappointment to millions of young Australians. Every year, the government makes it harder for the youth to invest towards their future. The policies being implemented are directly discouraging long-term investors to the point where aspirations, such as owning a home, have changed from a plausible goal to an optimistic dream. As a financial advisor with over a decade of experience, I am appalled by the capital gains tax shake-up. If the government truly cares for the youth, it must change its financial policies to support them.

Normally I wouldn’t make politically based content on this finance channel, but Australians need to hear this.

For those who don’t know, the Australian budget is an “in-depth” plan for ways in which Australia can “improve” both spending and collecting money.

In other words, it is a bunch of overpaid, out-of-touch degenerates plotting ways they can suck even more money out of us so they can fund their luxurious overseas trips with taxpayers’ money - and by the way, yes, that really happened.

After reading through this lengthy document more times than any government official has, I can confidently say that it is going to do far more harm than good for young Australians. By far the most destructive bill is the cost-based index system, which will replace the 12-month capital gains discount. This system will utilise the consumer price index, which is a value that represents inflation over the period.

So will this really hurt the average young Australian looking to invest their money? I ran the numbers to find out.

set that up

Jake is a mate I play footy with, yano, your average 21-year-old Victorian uni student. Jake has been working hard ever since he got his first job at 16 and responsibly saving a large portion of this for the future. Jake decides he would like to invest, so after thorough research he settles on the Nasdaq ETF as he believes it is reliable and has potential future growth. Jake was right; three years later, it had an average return of 24.41% pa. His investment was now worth $57,767 (a $27,767 gain). Jake wants to use this to put a deposit on a house, so decides to sell. When it came to paying the tax, it was quick and easy to find the correct amount. As he had held the investment for more than 12 months, he took 50% of the amount, leaving him with $13,883. Then he took 32% (his 30% tax rate plus 2% Medicare levy) and was left with his tax bill.

$4,443. Honestly not a terrible amount; at least the process was simple.

Out of curiosity, I used that same situation with the proposed tax changes.

To say it pissed me off would be an understatement.

$8,147. You would pay $8,147 of tax under the new system. The difference is criminal.

Now this is assuming an inflation rate of 2.5%, which, by the way, is the Reserve Bank of Australia’s target figure.

I can already hear the furious typing in the comments. “Well, Liam, you would pay less on the tax if the inflation rate was higher…”

If it was 3.5, you would pay $7,841.

If it was 5, you would pay $7,372.

That’s still nowhere near the original system’s $4,443.

“Well, Liam, it actually saves you money when you keep the investment for longer.”

If Jake had kept it for 10 years, the inflation rate was on target, and his average return was the same pa, he would lose $35,149 on his investment.

By the way, you don’t need to be some kind of genius to get these figures. There are hundreds of free calculators out there already that you can input values that describe your situation, and it will give you a direct comparison of how much you are losing.

Yes, there are instances where individuals may save money with the new system. But for this to take place, the return must be relatively low, around that 6 to 8% mark.

For reference, the most traded ETF in Australia has returned 10% pa over the last 3 years.

Now, admittedly, the budget is not all doom and gloom. They are giving working Australians a $250 tax offset. Yes, absolutely, that is great, but it feels like giving someone a 20 bucks and then stealing their wallet, which had 100 in it.

It’s all just another way to distract Australians by drawing their eyes towards the small positives and away from the suffocating negatives.

Many of you may be questioning why the government is constantly needing more of your money. The answer is very simple. They spend a shit ton. And a lot of it is on useless crap.

I truly feel bad for young Australians watching this. I am old and in a stable financial position. Luckily, I was blessed to grow up in a time when the youth was supported in their journey in building wealth. I hope that this channel can help inform and guide you about things the government feels okay to simply sweep under the rug. Every single person watching this video needs to put their foot down, make some noise, show them that it’s not okay for them to keep reaching into your wallets. Do everything you can to stop this bill from going through. One step forward and two steps back, nobody gets too far like that. This is not an issue silence is going to fix. Thank you.