Labor Cabinet secretary Andrew Charlton has conceded the new capital gains tax regime “doesn’t interact well” with small businesses that have a low capital base.

The comments made by the Assistant Science Minister on Nine’s Today show on Friday appear to validate the sector’s concerns about the reform.

Asked if the Budget “outcry” was “unwarranted”, Mr Charlton acknowledged the new system hurts underfunded businesses.

“The point that many start-up founders, the point that many small businesses have been making is valid,” he said.

“It’s a valid point because that new regime doesn’t interact well if you have a really low capital base because you’ve got nothing to inflate off.

“So, there are real concerns out there.”

The Labor rising star added that the Treasurer had himself recognised the concerns of the sector before the Budget, noting in the final edition included that consultation would continue.

Treasurer Jim Chalmers had yesterday described much of the criticism as a “scare campaign built on lies” but had also agreed that the changes were “contentious”.

It comes after waves of small business owners used AI-generated images of Anthony Albanese to criticise Labor’s decision to include all asset classes in the CGT changes in what those critics are calling a “tax on success”.

The 50 per cent CGT discount will be axed to make way for an inflation-indexed model and a 30 per cent minimum tax rate on all net capital gains, covering everything from property to new shares and crypto.

But the fallout continued from the promise-breaking Budget on Friday, with new polling carried out by DemosAU for Capital Brief showing One Nation had overtaken Labor.

The poll, which was undertaken between May 14 and 20, showed Labor had sat flat on a 26 per cent primary vote while Pauline Hanson’s minor party rose to 28 per cent.

It comes amid reports that the Albanese government is considering a possible carve out for the changes to new discretionary testamentary trusts.

A concession could help Labor counter claims from opponents that the changes would be a “death tax” or “death duty” on Australians.

When asked about the speculation on Friday, the prime minister labelled claims Labor was trying to hit to inheritances as “misreporting” but added there would be consultation around trusts.

“Let’s be very clear. When it comes to some of the misreporting that’s there, we’re not interested,” he said.

“There’s no measures in there that are going to hurt inheritances.

“On trusts, there’ll be a consultation period about that, and we made that clear on Budget night.

“So, we’ll work through the legislation. We’ve said (it) will be introduced in the second half of the year.”