Reform taxation to strengthen social cohesion

March 20, 2026

Inheritance perpetuates financial inequality. With current taxation and policy settings this inequality is set to grow substantially over coming decades. This will encourage social instability as society is divided more permanently into the haves and have-nots.

There are two ways in which this situation can be alleviated.

Firstly, government must remove those taxation benefits designed to benefit those who already have capital wealth – negative gearing and the capital gains tax discount. Had government not foregone taxation revenue through granting those concessions, and invested equivalent amounts directly into social housing instead, our society might look very different today.

Secondly, the government could follow the lead of other developed countries and introduce an inheritance tax. Such a tax need have no financial impact on the asset-owner while they survive, nor on their surviving spouse should they inherit; it would claim funds from inheritors before they have ever received them. This solution could, with minimal disruption, generate funds for social housing to alleviate the financial inequality which is driving us apart. The forthcoming budget presents a golden opportunity to initiate these reforms. This is a challenge to which the Labor Party must rise: it must stand up for the common good.