The biggest and best tax reforms in 25 years just passed the Parliament.

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In fact, you would have to go back way before the noughties to find tax reforms that will make Australia fairer than Labor's reforms passed this week with the support of the Greens and David Pocock in the Senate.

Most tax reforms passed in the last 25 years have been either tweaks, regressive (penalising poorer people or helping the rich), or have been repealed. More on that later.

Labor's tax reforms are progressive, and the most talked about reforms are the ones that will affect housing. Finance journalist Alan Kohler neatly summarised Australia's housing crisis this way: "It's no longer possible for somebody who doesn't have reasonably wealthy parents to buy a house. It's as simple as that. And it's a fundamental change to Australian society."

That's the problem Labor is targeting with these reforms.

It used to be that house prices increased at roughly the same rate as incomes. Then in 1999, John Howard introduced the 50 per cent capital gains tax (CGT) discount and together with negative gearing, it fundamentally distorted Australia's housing market. Housing went from being the family home to a financial asset. The tax concessions favoured investors, who flooded into the market, out-competing owner-occupiers, and house prices started increasing at double the rate of wages. Thanks John Howard.

Not only did these two tax concessions make housing unaffordable, they also cost taxpayers an absolute bomb and they massively benefited the very highest income earners at the expense of nurses, teachers, hairdressers and panel beaters.

Recent Parliamentary Budget Office figures show that more than 80 per cent of the CGT discount goes to the top 10 per cent of income earners. Almost 60 per cent of the benefit goes to the top 1 per cent (those who earn more than $362,900). That's roughly $13 billion a year, that was benefiting just the top 1 per cent of income earners in Australia. It was completely unfair.

The Greens wanted to go further,........

© Canberra Times