A moral imperative: Addressing the unequal tax treatment of wages vs wealth

Australian Council of Trade Unions submission to the Economics Legislation Committee inquiry into the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026

The ACTU welcomes the Treasury Laws Amendment (Tax Reform No. 1) Bill 2026 and the Income Tax Rates Amendment (Tax Reform No. 1) Bill 2026. They are important steps towards ending the preferential tax treatment of wealth when compared to that of income derived through work. The preferential tax treatment of wealth is inequitable, contributes to ongoing inequality and hands advantages, and tax dollars, to the wealthiest people in our society. The Capital Gains Tax discount and negative gearing have created distortions in our housing market which have driven house prices out of reach for an entire generation and funnelled the benefits to the wealthiest. Discretionary trusts have protected the earnings of wealthy and high-income families from taxation and ensured that the top 10 per cent of families benefit from a system that is inaccessible to the vast majority of working people.

The tax changes that the Government has proposed in these Bills will address some of the most pernicious impacts of this inequity and begin to address the severe reduction in housing affordability experienced by younger Australians. These changes will ensure that all Australians are paying their fair share of tax, and we will no longer be asking working Australians to subsidise the income of professional landlords and the ultra-wealthy. Combined with tax cuts designed to ensure low and middle-income Australians have more of their own money in their pockets, these Bills will, according to Treasury analysis, benefit 9 out of 10 young people as well as represent a critical first step in addressing the tax imbalance in our system and in restoring equity. Australian unions fully support these Bills and commend them to the Parliament for passage.

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