‘Driving inequality’: How government inaction is making wealth gap widen

New Daily
Aug 28, 2024



The gap between the haves and have nots is widening as tax breaks help out the wealthiest.   


Property tax breaks and super concessions are being blamed for a blowout in wealth inequality, with a new analysis calling for an overhaul of the tax system to benefit millions of working families.

A report published this week by Anglicare Australia said the top 20 per cent of the wealth scale is 90 times better off than the bottom 20 per cent, with the average wealth of the highest 5 per cent topping $6.6 million.


Anglicare executive director Kasy Chambers said tax breaks are turbocharging inequality, with workers paying much more tax on their incomes than investors have to on their capital returns.

“Our research also shows that inequality has been turbocharged by tax breaks that help people who are already wealthy build big superannuation balances, property portfolios and investments,” Chambers said.

“We should be using our tax system to make Australia fairer. Instead, government policies are driving inequality and making it worse.”

The federal government is facing growing pressure on tax reform before the next election amid warnings from experts about the drivers of the housing crisis and pressure on public finances.

The cost to taxpayers of negative gearing and capital gains discounts will balloon over the next decade, while other tax breaks for super are still costing billions, despite a recent crackdown.


Anglicare said tax settings have driven a near doubling in average real household wealth over the 19 years to 2022 – concentrated in income from investments.

The average value of investment properties have risen 99 per cent, while the average value of shares and other financial assets has soared 76 per cent over that time, Anglicare explained.

“People who earn income from work are paying more tax than people who earn income from their wealth,” Chambers said.


“That needs to change if we want to make our tax system fairer.”

Anglicare analysis shows that more than half of the foregone revenue from negative gearing goes to the top 20 per cent, while just 6.2 per cent goes to the bottom fifth.   

The organisation wants the government to reduce capital gains discounts over the next 10 years, and limit negative gearing to social housing.

It also wants super tax concessions to be replaced by an annual refundable rebate, with capped contributions.

“We’re calling on them to wind back housing tax breaks that have pushed housing costs up to record highs … and we’re calling on them to tax income from investments fairly,” Chambers said.

“Making these changes is about stopping inequality from getting worse, protecting our community from disunity, and restoring the faith of Australians that government can work for them.”