Investor Incentives in times of high inflation: Capital Gains Tax discount vs Taxing indexed gains?

For context: I'm Australian, our tax policy was changed by Howard in 1999 to swap indexing capital gains to a flat 50% discount after 12 months of owning the asset. There's a lot of discussion at the moment in the media as it seems the current federal government (Labor Party, centre left Keynesians) is probing for public interest in tax reform.

I was doing the math, and started coming to some concerning conclusions that I wanted to run by others. What are the arguments for and against the following speculative line of reasoning:

## Premise 1:

Capital Gains Tax Discounts dissuade investment in low-yield assets when compared to Indexed Capital Gains Tax.

Eg, a 50% CGT Discount would require the capital gain to outpace inflation by 100% to 'break even' with an indexed CGT.

## Premise 2:

The above effect means that periods of higher inflation require higher returns to minimise tax, and therefore would incentivise investors to move capital to high-return assets in periods of high inflation.

## Premise 3:

The goods and services that make up the majority of Australia's Cost Price Index 'basket of goods' are produced/provided by industries that typically have a lower return on investment.

## Premise 4:

If, during periods of higher inflation, investors are moving capital out of low-return industries that produce the goods and services that make up CPI 'basket of goods', this reduced access to capital will limit the amount these industries can increase supply.

## Premise 5:

If whenever inflation is higher, capital is restricted to industries that produce CPI 'basket of goods' goods and services, therefore less of these goods and services are produced restricting supply, therefore increasing inflation.

## Conclusion:

CGT discount tax policies inadvertently amplify inflation in comparison to indexed capital gains policies.