Mr Eslake likened the tax system to a "giant Swiss cheese" riddled with holes that allow the wealthy to pay less tax, and says taxpayers in the top tax bracket are on average 2½ times more likely to make use of tax minimisation strategies.

"For example, while I have no quarrel with the use of trusts to facilitate the orderly transfer of business assets from one generation of owners to the next, or to protect assets from vengeful ex-spouses or indigent offspring, I can't think of any legitimate public policy reason why trusts should also allow people to pay less tax than they would otherwise, by facilitating the transfer of pre-tax income earned by someone who would be in the top tax bracket to other people who are not," Mr Eslake said.

"Likewise, the long-standing availability of negative gearing for investors in property ... has done very little – at very large cost in terms of revenue foregone – to increasing the supply of rental housing, as opposed to doing a great deal to inflate the price of the existing stock of both rental and owner-occupied housing."

But Mr Eslake has sympathy for the fact that Australia has the second-highest personal tax rate in the English speaking world.

He said there was a case for axing the $18,200 tax-free threshold to lower the top headline rates of 37¢ and 45¢ in the dollar.