This piece was originally published in the AFR. Click here to read. 

***

Here's a tax agenda for Chalmer's roundtable

History shows that big, well-structured tax reform packages - anchored in clear goals and roughly revenue neutral - can succeed both economically and politically.

Allegra Spender Member for Wentworth

Jun 20, 2025 6.00am

The Treasurer has opened the door on broad tax reform. That is welcome courage. Now it’s up to those who purport to care about Australia’s long-term future to turn this moment into momentum.

To start, we must acknowledge a basic truth: real reform will create winners and losers. That’s not a reason to walk away; it’s a reason to explain why reform is worth it.

The Treasurer’s goals are productivity, sustainability and resilience. Intergenerational equity should be there too. Bloomberg

I agree with the Treasurer that we must also resist the temptation of “rule-in, rule-out” politics. That approach has held us back and if we’re serious, everything must be on the table.

This doesn’t mean giving the government a green light on just any change, or not pushing them on managing spending. But it does mean creating the political space to develop serious options and work with the community on finding an acceptable path forward. This is only possible if we agree that the status quo is no longer good enough.

So, what should guide reform?

Before jumping to our favourite ideas, we need to agree on the goals. Clear objectives create a framework for decisions and build the case with the public.

The Treasurer has nominated productivity, sustainability and resilience. I’d agree, with the addition of intergenerational equity.

What would success look like then?

• A more productive economy. That means a tax system that encourages innovation and business investment – both domestic and foreign – especially for our innovative, high-growth firms of the future.
• A sustainable budget. We must address our shrinking tax bases like fuel and tobacco excise and GST as a proportion of tax, but also our over-reliance on income tax when our population is ageing.
• Environmental responsibility. A tax system that properly accounts for negative externalities and incentivises sustainable practices and the energy transition.
• Intergenerational fairness. A tax system that affords young Australians in five, 10, and 20 years the ability to reach the same life milestones their parents did.

With that lens in mind, here are some of the big areas that should be on the table.

Business investment and corporate tax

Australia’s low business investment points to a need for reform. Cutting the top corporate tax rate might attract investment, but it would also give a huge free kick to existing investments, particularly in the resource sector, and may not necessarily help our most innovative businesses. Alternatives like targeted investment incentives or raising the revenue threshold for the top rate of 30 per cent should be explored.

Resource and digital services taxes

But we also need to pay for corporate tax reform, and I don’t think the Australian public will accept footing the bill for a corporate tax cut. This means the corporate sector is looking internally, including at resource taxes that could achieve a fairer return on national assets. Even with recent tweaks, the PRRT still underperforms. The diesel rebate also needs review — ideally alongside broader road user charging.

Taxing mainly international digital services is tricky, particularly given the Trump administration. But with the rise of AI and the increasing power of digital platforms, it’s time to re-examine Australia’s approach.

Personal income tax

We must reduce the burden on workers, but if we don’t index tax brackets any change will be short-lived. Phasing in indexation – say, 0.5 per cent per year – would make the system fairer for younger working Australians and add discipline to government spending.

Savings and superannuation

If we shift away from taxing income, we need to look at investment earnings. There’s room to reduce distortions in how different forms of savings are taxed, and to reassess concessions on capital gains and super.

GST and state taxes

The treasurer has not supported GST changes in the past. But progressive governments globally use broad consumption taxes to fund services and protect the vulnerable. Broadening and/or increasing the GST could support personal income tax cuts and even fund job seekers and income support.

Rethinking the GST also opens the door to addressing inefficient state taxes like stamp duty and payroll tax, which discourage mobility and employment – particularly relevant with the coming AI revolution. We must also include reviewing the unaffordable WA GST deal, which can only realistically be dealt with through bipartisanship.

Yes, the list is long. But history shows that big, well-structured tax reform packages that are anchored in clear goals and are roughly revenue-neutral can succeed both economically and politically. The Hawke and Howard governments proved it. But only because they made the case – and stuck to it.

This is the moment for the government and the parliament to show they’re serious about creating a more prosperous, fairer future for all Australians.

Let’s not blow it.