The report – Three Ways Australia Can Tax Wealth Better – comes on the eve of Treasurer Jim Chalmers' Economic Reform Roundtable, which recognises the growing need to raise more tax revenue to pay for things like health services, schools, housing, the NDIS, defence, and many, many more essential public services.
Key findings:
- A 2% wealth tax on people worth more than $5 million (excluding the family home and superannuation) would raise $41 billion per year.
- The reintroduction of an inheritance tax (which operated in various forms at a state and federal level in the 1960s and 70s) would not only reduce intergenerational inequality, it would raise $10 billion per year.
- And the government would raise an extra $19 billion a year if it scrapped the capital gains tax discount, which would have the double benefit of making property more affordable for those currently locked out of the market.
"Australia is a low-tax country that does not do a good job of taxing wealth. It is one of the few developed economies in the world which has neither a wealth tax nor an inheritance tax," said Matt Grudnoff, Senior Economist at The Australia Institute.
"Correcting this would raise huge amounts of extra revenue for essential services and ease growing inequality in Australia.
"Even if you were to exempt the family home and superannuation, a 2% wealth tax on people worth $5 million would raise $41 billion per year. If you limited it to just the 200 richest households in the country, it would still raise $12.5 billion per year.
"Many countries – including the US, UK, Japan and most of Europe – have an inheritance tax or something similar. A couple of generations ago, Australia had probate and succession duties that raised 0.36% of GDP, which, if reintroduced today, would deliver an extra $10 billion in revenue.
"And it's time to scrap the capital gains tax discount, for many reasons. Not only would it put downward pressure on house prices and reduce inequality, it would raise an extra $19 billion a year.
"These are not radical ideas.
"If we want well-funded schools and hospitals; decent, affordable housing for all; a world-class NDIS; a fair welfare system; and dozens of other things which would improve the lives of millions of Australians, we can have them."
