Reform of capital gains tax and negative gearing should be a priority in the forthcoming tax white paper, according to the Murray Financial System Inquiry.

Differing tax rates on savings, changes to franking and the imposition of the GST on financial services were among other issues listed by the inquiry as worthy of white paper discussion.

"Ponzi is a word I mentioned when I spoke to the Treasurer," Liberal MP John Alexander says. Credit:Glen McCurtayne

All of them "distorted funding and risk" in the economy or produced other adverse outcomes, it said.

The fully tax-deductible nature of negative gearing and the concessional tax rate applied to capital gains "encourages leveraged and speculative investment – particularly in housing", the inquiry found.