Federal Treasurer Jim Chalmers went about his tax reform the wrong way. He thought that if he could get the negative-gearing, trust, and capital-gains changes over the line in the budget process he would be in a position to offer some income-tax cuts in subsequent years.

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He has copped an onslaught from greedy, self-interested parties, using every specious argument and scare tactic in the book to oppose the changes to the way capital is taxed.

He should not have done taxes on capital on their own. He should have tied the increase in capital taxes with big reductions in income taxes: a total package of major tax reductions for low-income earners (with the emphasis on "earners") which would only be available if the changes to the tax on capital and trusts went ahead.

It is still not too late to do this.

About $40 billion in tax is lost to schemes and loopholes that reduce tax on the earnings from capital - negative gearing, capital-gains concessions, cash franking credits, and trusts. They are basically government handouts to non-working Australians.

What we need is for Jim's Mowing to come along and scoop up that $40 billion into the grass-catcher and give it to deserving people who work for a living and pay tax through the Pay As You EARN system - the people who get up in the morning, grab some toast and a coffee, put on a hi-vis shirt, and hit the construction site or a child-minding centre, an office, or a shop.

These are not the people who sit round the trusty family dining-room table waiting for unearned income to come around on the Lazy Susan.

With the transfer of the $40 billion from people getting income from capital to people earning money from labour, no wage or salary earner would have to pay any tax on the first $65,000 of income.

But Chalmers must make the link. He must say the only way to help hard-working Australians (emphasis on "working") is to remove the handouts to capital. A general move in the overall tax rates does not differentiate between capital and labour.

It is simply not possible to give........

© Canberra Times