The GST should be raised to 15 per cent and the benefits of negative gearing rolled back, according to big four accounting firm KPMG.

In a submission to Treasury, the firm recommended cutting corporate tax from 30 per cent to 26 per cent, replacing stamp duty with a new property services tax, and overhauling fringe benefits tax.

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KPMG proposed a 25 per cent discount on personal capital gains, down from 50 per cent. This, it said, would limit the benefits of negative gearing.

The firm also suggested linking thresholds to average full time earnings to eliminate bracket creep.

“None of these changes will be easy, but we believe they would be equitable and put the Australian tax system on a long-term sustainable path and away from the current lop-sided reliance on bracket creep and stamp duty to pay the bills,” KPMG national managing partner, tax and legal, David Linke  said.

The firm said GST reform was ‘critical’ and called on the states to agree on changes.

KPMG believes the overhaul package can be rolled out over the next eight years.

“We accept that major change cannot happen overnight and believe that eight years is a realistic timeframe to secure the necessary political agreement. A key aspect of our thinking is to improve the current tax structure between states and federal government, which is a significant cause of inefficiency,” Mr Linke said.