Forget the Bahamas or Cayman Islands. Australians have created the best tax shelter on earth: Australian property.

Ahead of next week's tax forum in Canberra, we can expect to hear a lot about the need to increase the goods and services tax and cut the company tax rate. But the most messed up part of our tax system is the way we tax housing.

Australia is home to some of the most expensive property in the world. There are many reasons for this: the halving in interest rates since the 1990s, freer availability of credit, housing supply shortages, a preference for bigger homes and the concentration of our population in coastal cities poorly serviced by public transport.

But one of the more fundamental reasons for Australia's home affordability crisis is a tax system that preferences property investment over almost any other way of generating income, be it through wages, owning shares or simply putting your money in a bank.

The tax system is stacked in favour of property speculation, which makes some people very rich, while leaving others, particularly young people, out in the cold. Notwithstanding the current cooling in the property market, affordability remains stretched for many would-be buyers. It's fair to say that if you wanted to design an efficient way to tax housing - without distorting activity or encouraging price speculation - you'd probably do the opposite to now.