Tax Policy in 2025

On 25 July 2025, there was a 6 hour roundtable hosted in Canberra by Allegra Spender MP focused on tax reform.

The event hosted some of the biggest wonks in tax and was a thrilling watch. Tax is often derided as being boring and dry - I can’t imagine anything further from the truth.

Tax firstly is the primary means for raising the government revenue necessary for the public services that we expect and want delivered at a high quality. Given you need to tax anyway, choosing what to tax means you can encourage productive, useful activities, and discourage non-productive or harmful activities.

I won’t pretend I’m a tax policy expert - you should watch the entire video here if interested: https://www.youtube.com/live/E9diyLKgNOE

But there were some areas I found extremely intriguing and I think should be more widely known:

Carbon and mining tax: According to Ross Garnuat, if the 2013 Liberal-National Government hadn’t vandalised the reform in taxing carbon and mining resources, the budget would have been in surplus every single year for the entire period of Coalition deficits, not to mention Australia’s climate footprint would be far smaller from the internalising of the prior carbon externality. It would have been incredibly efficient and we would have far further transitioned in other forms of electrification and could have been a world leader in climate related tax reform. We still can be, despite dropping our ten years headstart.
Horizontal fiscal equalisation: Systematically reduces incentives for (or actively disincentivises) states to introduce more efficient taxation as they’ll just be penalised with a reduced distribution. This likely plays into other state-level reforms like land tax or payroll tax in complex ways I hadn’t previosuly considered.
Superannuation: I’ve had an inkling for some time that superannuation feels like a get-richer scheme. For myself, in a family with a mortgage and slightly above average income (roughly 75th household percentile), I feel like we can still set aside some money to put in shares each month and by 60 we’ll have $3 million in that asset, ignoring the equity in our home, increased saving potential once mortgage is paid, superannuation or any further increase in earning potential over the next 30 years. To have superannuation on top of that means I’ve been able to avoid 15-20% tax for a tenth of my income for my life with no real impact in my retirement outcomes as I’ve no doubt that by itself will be plenty to enjoy life on. This is all confirmed by Brendan Coates presentation on how superannuation in its current form is not fit for purpose and needs to be reigned in at the top end to actually continue being a vehicle for retirement savings and not just a tax minimisation scheme for the rich.
Labour vs Capital: The share of national income that goes to effort or labour has dropped significantly, and the value from capital (particularly land) has increased and will continue to increase. This is an enormous problem, as the more that people think you can just get a home and watch its value grow despite being unproductive, the less incentive there is to work, contributing to loss of purpose at work and an erosion of the social contract.