A Senate inquiry report released today has added fresh momentum to calls for reform of the capital gains tax (CGT) discount, said Oxfam Australia, amid growing evidence the policy disproportionately benefits wealthy investors and worsens inequality.
The inquiry’s findings reflect long-standing concerns that the tax system is allowing large concessions on investment income while many Australians face rising living costs and housing pressures.
It also found that the benefits of the capital gains tax discount are unequally distributed, with implications for income and wealth inequality and intergenerational inequality.
Oxfam Australia Chief Executive Jennifer Tierney said the report should prompt serious consideration of reforms to ensure the tax system works more fairly for everyone.
“The inquiry reinforces what many Australians already suspect - the Capital Gains Tax discount delivers its biggest benefits to people who are already very wealthy,” said Ms Tierney.
“Oxfam’s research shows that nearly half of the CGT discount goes to just 24,000 people earning more than $1 million a year. On average, each received a tax break worth around $271,000 — vastly more than the benefit available to ordinary workers.
“At a time when so many Australians are struggling with the cost of living and housing affordability, it’s reasonable to ask whether billions in tax concessions should continue flowing to a small group of high-income investors.
“Reforming unfair tax breaks like the CGT discount would help restore balance to the tax system and could free up billions of dollars each year to invest in things Australians care about; from housing and essential services to measures that reduce poverty and inequality,” she said.
Oxfam’s report The Elephant in the Room: Australia’s failure to tax wealth, released in October, found scrapping the capital gains tax discount for individuals and trusts could return around $22.7 billion to the federal budget each year. Polling commissioned by Oxfam also shows strong public concern about inequality, with 73% of Australians worried about the widening gap between ordinary people and the super-rich.
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