The Australian Council of Trade Unions will call for bold changes to negative gearing and the capital gains tax at the government’s productivity roundtable this month, arguing the tax breaks be limited to one investment property.

Under the proposal, the current arrangements would continue for five years to allow investors time to rethink their portfolios before the changes come into force. 

The issue is politically fraught for Labor, who took reforms to negative gearing and capital gains to the 2016 and 2019 federal elections and lost.

But ACTU secretary Sally McManus told ABC’s Insiders it was time to “bite the bullet”.

“Otherwise, we’re just saying ‘too bad young people, you’re not going to be able to ever own a home’,” she said.

“Since 2019, the problem has just got worse. It’s going to continue to get worse unless the government is brave enough to do something about it.”

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Negative gearing refers to a policy that allows investment property owners to deduct losses from rental properties from their overall taxable income, while the capital gains tax discount lowers the rate of tax paid when houses and shares are sold.

Nearly half of all Australian landlords had negatively geared properties, according to figures released in December, with the highest earners hauling in tens of billions of dollars from tax concessions and loopholes.

The ACTU’s proposal would raise about $1.5 billion in tax revenue each year, according to Ms McManus, who added that those with investment properties would have time to adjust their portfolios.

“Part of the problem is that we’ve been keeping a whole lot of capital in housing. And it’s not those people’s fault. They’ve done that because it has worked for them and they’ve made smart decisions around that,” she said.

“But it’s also meant that capital is not being invested in areas that are going to increase productivity, like Australian businesses and other ways that it can be invested.”

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Ahead of this year’s election, Prime Minister Anthony Albanese hosed down speculation Labor was planning to scale back the tax breaks after it emerged that Treasurer Jim Chalmers requested his department to model the impact of changes to the concessions. 

Asked if he would rule out future changes to the policies in April, Mr Albanese said: “I’ve done that multiple times … and if you ask me tomorrow, we’ll get the same answer.”

Ms McManus did not divulge whether she believed the government, after its landslide victory earlier this year, would back the proposal but stressed that the union would “go and argue it”. 

“In the end, the government will make their decisions based on what they think is in the national interest. We would say that it is in the national interest,” she said. 

The union — which represents about 1.8 million workers — will also propose a 25 per cent minimum tax rate for people who earn over $1 million, which would also apply to family trusts.

It will also argue for a new export levy of 25 per cent of the revenue from the sale of liquified natural gas, instead of the current Petroleum Resource Rent Tax on oil and gas exploration.

Mr Chalmers has signalled he will use the three-day roundtable to seek new economic reforms, prioritising “consensus” among unions, business and economists.

He has said he wants any reform proposals brought to the roundtable to be budget neutral or budget positive but that all ideas are on the table.

Earlier this week, the Productivity Commission released the first of several reports requested by Mr Chalmers in the lead-up to the roundtable, in which it called for a 20 per cent tax rate on profits for companies with revenue of up to $1 billion.

That would represent a significant cut for all but the largest companies from the current rate, which is 25 per cent for companies with turnover under $50 million and 30 per cent for all others.

It also called for a new 5 per cent tax on net cashflow rather than profits, which could see some large companies pay a higher rate but would provide immediate tax relief for smaller companies seeking to build their capital.