Warnings that looming tax reforms will worsen Australia's productivity malaise are overblown, financial experts say.
If anything, the reforms may boost productivity, senators heard as day one of a two-day snap inquiry into the tax changes began on Monday.
Under the changes, the 50 per cent discount for capital gains tax will be replaced with a rate tied to inflation and a 30 per cent minimum, while negative gearing will be limited to new houses only from July 2027.
That would remove distortions in the tax system and incentivise people to invest in assets that have higher rates of return, rather than a higher tax advantage, tax expert Peter Varela told the inquiry.
"Tax neutrality will always get you more productivity," said Dr Varela, from the Tax and Transfer Policy Institute at ANU.
