Hey big Spender: teal MP wants consumption tax re-think

Allegra Spender wants genuine tax reform after years of inaction from both major parties. (Lukas Coch/AAP PHOTOS)

Independent MP Allegra Spender represents the country's richest electorate but believes the tax system unfairly advantages wealthier Australians over working people.

Australia should look at increasing consumption taxes like the GST and reducing tax concessions, while cutting income tax, to tackle intergenerational inequality, she told the National Press Club on Wednesday.

Ms Spender, who lives in the seat of Wentworth in Sydney's well-heeled eastern suburbs, said governments of all stripes had failed young Australians, who were increasingly bearing a larger tax burden.

"Young people know they are falling behind," she said.

Independent Member for Wentworth Allegra Spender
Allegra Spender says young people earn less and are taxed more than older, wealthier people.

"People are fed-up with band-aids and short-termism - designed to distract from the inescapable truth that these problems are far greater than we like to think - and much harder to solve than we want to believe."

Ms Spender, who holds an economics degree from Cambridge, has long argued the need for genuine tax reform, which has for years been left untouched by both major parties despite a landmark tax review in 2010 calling for sweeping changes.

The system was too reliant on income taxes, which are disproportionably paid by young people, while wealthy Australians benefit from concessions.

"Young people are earning less, worth less and taxed more than older, wealthier people," she said.

"The current cost-of-living crisis exacerbates this because it has affected profoundly those people renting or with big mortgages and low savings.

"These are wicked problems and politics as usual has failed to solve them."

To make up for lower income taxes, Ms Spender called for an increase to consumption taxes and a wide-ranging re-examination of the GST, which is due to be reviewed by the Productivity Commission by the end of 2026.

Housing is another main driver behind intergenerational inequality, Ms Spender said.

Contrasting with teal counterparts like Monique Ryan and Zoe Daniel, who have criticised the Victorian government over its plans to increase density, Ms Spender welcomed zoning reform to make housing more affordable.

"My community in Sydney is I think one of the densest electorates in the country ... and it works so well," she said.

People swimming at Murray Rose pool on Sydney Harbour, at Double Bay
Ms Spender says the high-density living in her community works well.

"It's a vibrant and really, really strong community. So we can build density that really, really works.

"We need to build across the board: in regions, in our suburbs, but also inner cities."

She also wanted to abolish stamp duty on home purchases - an "awful" tax which "penalises people who move home, downsize or divorce" - but was against changing negative gearing or the capital gains tax discount before housing supply was back where it needs to be.

Ms Spender promised to release a taxation green paper before the next federal election, due by May.

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