This paper, the first in a series of papers on tax reform in Australia, focuses on capital gains tax (CGT) and negative gearing. These were two of the top three priorities for tax reform identified by participants in Per Capita's Community Tax Summit 2025. This finding is reinforced by the Per Capita tax survey 2025, where both reforms were among the most popular ways to raise revenue for improved services.  

The paper sets out the evidence and reasoning behind two key recommendations:

• to reduce the CGT discount from its current 50% to 25%.
• to limit negative gearing deductions to investment income only.