Allegra Spender says Labor will ‘not be believed’ on tax

The teal independent says Labor ‘won’t be believed’ on any future election tax pledge, warning both sides of politics will need a reform agenda.

Teal independent Allegra Spender speaks at the National Press Club of Australia in Canberra on Wednesday. Picture: NCA NewsWire / Martin Ollman

Independent MP Allegra Spender says Labor will not be believed if it goes to the election vowing to make no changes to tax, as new Treasury estimates revealed that negative gearing and franking credits are costing the budget more than $25bn a year.

Ms Spender said Anthony Albanese’s broken promise to honour stage three tax cuts presented the right opportunity for the government to formulate a package of reforms to create overdue change to the tax system.

She has also left the door open to working with Labor and the Coalition in the event of a hung parliament, saying she hoped not to reach the next election without significant work on tax reforms being completed but if not there would be a “negotiation point”.

In a joint address to the National Press Club, Ms Spender and Australian Institute executive director Richard Denniss debated the direction tax reform should take and the merits of Labor’s backflip on stage three tax cuts.

“(Labor MPs) said they weren’t going to make any changes to tax, they have made substantial changes to tax,” Ms Spender said.

“I don’t think they can go to the next election and say, ‘we’re not going to make any changes to tax’. They will not be believed. This is their choice now.

“This is the opportunity the government has to say, ‘OK, there are some really significant issues with our tax system’. This is the time to change it, to look that in the face, and to go to the election with that.”

Ms Spender said “we should be looking at how do we make sure we reduce our reliance on income taxes and … negative gearing, savings taxes, capital gain taxes, they should be on the table”.

The new figures were revealed in Treasury’s latest Tax Expenditures and Insights Statement, which calculates revenue foregone as a result of major tax breaks, alongside an analysis of how concessions are distributed.

After offering only lukewarm assurance on Monday that the government was not “contemplating or considering” reviving crackdowns on negative gearing and franking credits, Jim Chalmers said the tax expenditure statement was “a requirement under the Charter of Budget Honesty, not a statement of policy intent”.

The Treasurer last February trumpeted Treasury’s revamped tax expenditure as a way to “increase public awareness and inform debate about the fairness and efficiency of the tax system”.

He highlighted analysis showing “the majority of super tax breaks go to high income earners” as a way to help support Labor’s announcement – made later that same day – that the government would renege on a promise and double the tax on earnings made on super balances above $3m.

The latest Treasury statement showed the five most expensive tax breaks, in terms of estimated revenue foregone in this financial year, are dominated by concessions on super contributions and earnings (a combined $48.6bn), alongside $27.1bn in rental deductions for landlords and $47.5bn in capital gains tax concessions for property owners and investors.

“Rental deductions are most commonly claimed by those with higher taxable incomes, with individuals in the top 30 per cent of taxable income accruing 65 per cent of the total benefit,” it says.