The non-profit sector has called on federal treasurer Scott Morrison to introduce a death tax, saying a levy on the estates of the richest Australians could raise billions in new revenue and charitable donations.
Tim Costello, chairman of the Community Council for Australia (CCA), says so-called "estate duty" taxes raise billions in the UK, Germany, France and other countries where they are in effect and would be the fairest way to meet Australia's growing budget burden.
"There has never been a stronger case for an inheritance tax," Mr Costello said.
The CCA, which represents a large number of Australia's leading charities and not-for-profit organisations, has proposed an estate duty that would encourage Australia's super rich to increase their historically poor level of donations to charity.
CCA CEO David Crosbie said a tax of 35 to 40 per cent on estates with a net wealth over $5 million could raise around $5 billion in revenue.
Reducing the applicable rate in return for donations to charities would also encourage at least $100 million in additional bequests, he said.
Death taxes, inheritance taxes or estate levies apply in most OECD countries, with Japan taxing at 55 per cent, the UK and the US at 40 per cent and France at 45 per cent.
In the UK, death duties raise $7 billion for the government.
Mr Crosbie said there were around 25,000 "super rich" Australian families and so the new tax would impact only a small percentage of the population and be fairer than an increase in the GST.
Mr Costello said a death tax would encourage the super rich to give back to the community.
"We are highlighting that all donations and bequests to charities should be totally exempt from estate duties," he said.
"So the more you give to charity, the more you help others whilst reducing the tax burden on the estate."
Australia had inheritance taxes until 1978, when Queensland premier Joh Bjelke-Petersen abolished that state's levies and other states followed suit.
Mr Crosbie said a new tax would have to be indexed to ensure it did not slip down over time to hit average income earners, and care would have to be taken to ensure compliance.
Mr Costello urged Mr Morrison to consider the idea.
"If built correctly, this tax could unquestionably help finance social needs in the decades to come," he said.
CCA's members include Lifeline Australia, Beyondblue, Mission Australia, The Smith Family and World Vision Australia.
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