Business leaders have warned the measures, laid out in the federal budget earlier in May, will lead to talent and funding moving offshore as the existing 50 per cent capital gains discount is axed in favour of a minimum 30 per cent tax rate.
The Albanese government is expected to introduce legislation to federal parliament within a fortnight that would end the discount and negative gearing for investors buying existing properties.
Opposition housing spokesman Andrew Bragg said he would increase the discount rather than remove it to get money flowing where it was needed.
"We should be looking to cut taxes," he told Sky News on Sunday.
"There are heaps of ways you could play around with (capital gains tax) to actually incentivise more investment."
Asked how the coalition would fund an already promised plan to end so-called bracket creep for income taxes - costing at least $22 billion - Senator Bragg agreed significant spending cuts would be needed.
Being too afraid to say what would be cut was "part of the weakness" of political leaders, he said, although he refused to nominate areas that would be targeted for savings.
Capital gains tax is paid when assets such as shares or property are sold, based on the increase in value.
The proposed regime would adjust returns for inflation before tax was applied, meaning the impost on low-growth assets could be less than under the existing discount-based regime, introduced by the Howard government in 1999.
But Labor's plan has been criticised by startup and small business supporters in particular for discouraging people from building and investing in young companies with low initial costs.
UNSW chief societal economist Richard Holden said the plans would create Australia's first-ever "productivity tax", under which productive firms paid more than their less-efficient peers.
"Two identical businesses, delivering the exact same service, one highly productive, the other unproductive, will now face vastly different effective capital gains tax rates," he said in a post-budget analysis.
"Young people will pay the biggest price for this profound policy error, because they will miss out on the jobs growth and prosperity that productive businesses create."
Labor cabinet secretary Andrew Charlton defended the tax changes as necessary to stop investment in existing houses from pushing up prices and starving other parts of the economy of necessary funding.
He also pushed back against suggestions he personally benefited from the old tax regime when he sold his consultancy business for tens of millions of dollars.
"I can tell you that across the assets that I have owned, this is a fairer system," he said.
"I would have lost out of some, gained out of others, but overall it is a fairer system."
Asked if the changes would make the nation a less attractive place in which to invest, Mr Charlton said comparing Australia's tax rate on a nominal gain in another country was not a like-for-like comparison.
"In many cases, our regime will be more generous to assets who have experienced a lot of inflation over a long period of time and that is not compensated for in the regimes of other countries," he said.
Independent senator David Pocock called for a parliamentary inquiry into the proposed tax change to avoid what he said was a worrying trend of measures being rammed through parliament without adequate public consultation to get policies right.
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