I’ve just launched my first Tax White Paper at the National Press Club.

Australia hasn’t seen significant reform of our tax system for more than 25 years. Since then we’ve made lots of small, ad hoc changes around the edges. The result is a system that has become more complex, less fair, and harder for Australians to plan around.

What we need to do is rebalance the tax system, so that it better rewards work, supports aspiration, and helps younger Australians build financial security.

Right now, Australia taxes income from work more heavily than income from assets. Two people earning the same amount can end up with very different tax bills depending on how they earn their income. In a country built on the idea of a fair go, that doesn’t feel right.

My proposal sets out a practical path forward.

1. Reduce the tax on working income.

The plan would cut the lowest marginal tax rate to 13 cents on the dollarand reduce all other marginal tax rates by 2.5 cents. For most working Australians, that would mean a meaningful reduction in the tax they pay on their wages.

2. Adjust the capital gains tax discount.

Reducing the discount from 50% to 30% would still protect genuine investment returns, while reducing incentives to borrow heavily to invest and ensuring capital income is taxed more fairly.

3. Ringfence investment losses.

Investment losses would only be deductible against investment gains, i.e. negative gearing. This would reduce artificial incentives to borrow to invest, particularly in housing.

4. Introduce a minimum tax rate for investment income.

A 27.5% minimum rate on investment earnings would reduce the advantage of income splitting through structures like family trusts.

5. Restore principled superannuation tax settings.

Superannuation should have a stable, principled tax discount relative to investment income outside super — providing confidence and stability for people planning their retirement.

6. Importantly, the package is budget neutral.

Every element has been designed so that relief for working Australians is funded by moderating concessions elsewhere — not by increasing the deficit or adding to government debt.

You can read the full proposal here:

Australia needs a serious discussion about how our tax system should work for the next generation. Too often the political debate on tax reform stops before it even begins.

If you think it’s time for responsible, budget-neutral tax reform that supports younger working Australians, I’d love your help.

You can visit TaxReformNow.com.au to send a message to your MP, Senators — and even copy in the Prime Minister and Treasurer — to let them know what you think. And please feel free to forward this email or share the link with anyone who might be interested.

Tonight I’m hosting a Zoom discussion with Professor John Daley to unpack the ideas from the National Press Club speech and answer questions about the White Paper.

Real reform only happens when Australians speak up.

Warm regards,
Allegra