The CGT ‘backflip’ is more tweak than transformation. Labor hasn’t changed its mind on housing

The noise, negative headlines and internet memes that have surrounded Labor’s capital gains tax changes since their budget night unveiling made a backdown feel like an inevitability.

It wasn’t a question of if concessions would be offered but rather when and, most importantly, how much they might undermine the original purpose.

For a government and prime minister that has so often shirked confrontation, this was an early and significant test of Labor’s newfound commitment to hard – and necessary – policy reform.

The proposed changes that Anthony Albanese and Jim Chalmers announced on Thursday appeared at first blush to be a major rewrite of their budget centrepiece.

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It was reported as such in various media outlets, including The Australian, which described it as a “massive policy retreat” and a “backflip”.

But on closer inspection, the substance of the changes are more tweak than transformation, a series of adjustments designed, at least in some cases, with the primary aim of neutralising the “scare campaigns” being mounted against them.

The most significant change will increase the annual turnover threshold for a small business to qualify for the existing capital gains tax concessions from $2m to $10m.

Responding to the viral meme campaign from entrepreneurs (and some disquiet inside Labor ranks), the government will design a special carve-out that allows “innovative” start-ups to access a 50% capital gains tax discount.

It will exempt all testamentary trusts – including trusts set up in the future – from its proposed minimum 30% tax rate in a direct attempt to defuse false allegations it is introducing a “death tax”.

It will also wind back some of the treasurer’s discretionary powers to make rules, in a bid to quell one of the Greens’ main concerns.

The concessions will cost the budget $475m over the forward estimates, a relatively small sum given the whole tax package is forecast to raise more than $8.1bn over that period.

The hostile reaction from opponents was as predictable as the backdown that prompted it.

The major business groups responded with similar statements that dismissed the changes as a small reprieve to an otherwise damaging attack on business aspiration.

The opposition leader, Angus Taylor, told Labor: “Scrap it, scrap the bill.”

Albanese and Chalmers were never going to be able to appease Taylor or the fiercest private-sector critics because to do so would have required not pursuing changes to negative gearing or the capital gains tax discount at all.