KPMG responds to the 2026 Federal Budget announcement

12 May 2026

"This is a budget not about tax reform, but one focused squarely on raising revenue" says KPMG chief economist Dr Brendan Rynne.

KPMG’s Budget brief containing our full response to the Budget is here – Australian Federal Budget 2026/2027.

Significant changes to negative gearing and capital gains have now been locked in as key reforms in the Federal Government’s fifth budget, but Dr Rynne says the changes fall short of what is required for real reform.

“This is not a budget that sets about achieving meaningful changes to our tax system, it is simply focused on gathering additional tax,” Dr Rynne said.

“Tax reform requires changes that meet the principles of simplicity, equity, efficiency and revenue adequacy, but arguably this budget only partially achieves some these of elements.”

However, Dr Rynne says tax changes that have been put in place are still reasonable and appropriate.

“As a nation we pay relatively less in tax than compared to the OECD average, and even with the changes to CGT arrangements, Australia is not a high tax economy by comparison,” he said.

“What we would have liked to have seen is some progress to increasing the efficiency of Australia’s tax system; less reliance on income taxes and more reliance on consumption-based taxes, instead this budget focussed on changing the settings that favour wealth accumulation over salary and wage income.”

Dr Rynne said incomes taxes are expected to represent 77.9% of total tax revenues on average over the forward estimate period, which compares to previous 10-year average of 75.6% – a number already identified by the OECD as too high.  

“The additional tax ask is necessary to help pay for the rising cost of goods and services being provided to the public.  Whether those goods and services are being provided efficiently and at the least cost remains questionable.”