Australia faces a major challenge from the predicted $5.4 trillion intergenerational wealth transfer over the next two decades, which economists warn could entrench inequality and reduce economic productivity. Former deputy Reserve Bank governor Guy Debelle says the solution lies in taxation: 'Taxation is how you redistribute. Basically, that's it. So what's the tax?'
Debelle notes that while Australia's tax system has traditionally been progressive and focused on income tax, rising wealth and asset-based income require a rethink. 'We have to think about what's the sort of spending we want the government to be doing and then how are we going to fund that?' he said.
Economists and academics have proposed various interventions to curb wealth inequality, similar to how income tax addresses income disparities. These include reforms to inheritance tax, property tax, and other measures aimed at redistributing wealth more equitably.
The debate comes as the great wealth transfer looms, with significant implications for social cohesion and economic dynamism. Policymakers are urged to consider structural changes to prevent further concentration of wealth among a few.
