As leaders from business, unions, and communities convene in Canberra for an important economic round table, a recent report from the Australia Institute has sparked debate over potential tax reforms, including the implementation of an inheritance tax aimed at generating $70 billion in tax revenue without impacting low- and middle-income Australians.
The report highlights that introducing a 2% wealth tax on individuals with assets exceeding $5 million could yield approximately $41 billion annually. Additionally, it proposes reintroducing an inheritance tax, which could generate another $10 billion, thereby addressing growing intergenerational inequality. This type of tax, often referred to as a “death tax” by critics, is levied on inheritances from deceased estates—a practice that Australia ended in the 1960s and 1970s.
Another significant recommendation is the elimination of the capital gains tax discount, which researchers believe could bring in an extra $19 billion each year and assist in making housing more accessible for prospective buyers.
Matt Grudnoff, a senior economist at the Australia Institute, asserts that Australia is lagging behind many developed nations in terms of wealth taxation, lacking both a wealth tax and an inheritance tax. He argues that rectifying this could provide essential services and help alleviate inequality. Even with exemptions for family homes and superannuation, the proposed wealth tax would still generate substantial revenue, with estimates suggesting that taxing just the wealthiest 200 households could yield $12.5 billion annually.
Before the removal of probate and succession duties, these taxes previously contributed to 0.36% of GDP in Australia, which, if reinstated today, could equate to an additional $10 billion in revenue.
The ongoing economic round table will consider nearly 900 submissions from various stakeholders, as noted by Prime Minister Anthony Albanese. He emphasised the importance of public dialogue, highlighting the significant common ground found on many issues during these discussions.
By facilitating a thoughtful examination of these financial strategies, Australia could potentially enhance funding for critical services such as healthcare, education, and affordable housing, ultimately improving quality of life for many Australians.