An overhaul of Australia’s capital gains tax system could improve the budget by $5 billion annually, with leading economists throwing their weight behind a return to indexing investment returns to inflation as part of a broader package of tax reform.

Treasurer Jim Chalmers has flagged a “public conversation” about the sustainability of Australia’s current fiscal settings, including $250 billion of annual tax concessions, as the Albanese government tries to plug a $50 billion structural budget deficit.