“Once it’s legislated, Jim Chalmers can say, ‘Well, let's look at people with share investments over a million dollars, or investments in residential property over a million or $2 million. They're well off, aren't they? They could pay paper profits tax as well’.”

Pearl said the problem with capital taxation like Division 296 is that it can only apply to a “very thin base” and there is enormous scope for people to restructure their affairs to avoid it.

“After all, if you invest in your own home that you occupy, you don't pay any capital gains,” he said.

“There will be restructuring [with the Div 296 tax], but even Treasury's assumption is that this tax will only raise $40 billion over 10 years. I know that sounds like a lot of money, but this financial year, the Commonwealth will spend three-quarters of a trillion dollars, so it's a drop in the ocean.”

Pearl continued that he also believes there is a chance that the legislation may not yet go through as the government has planned.

“It's significant that the government hasn't scheduled its introduction to Parliament yet. I don't think [Prime Minister] Anthony Albanese is sold on this, so we could yet see a withdrawal of this tax proposal, which I do think would be a devastating blow to Jim Chalmers’ credibility.”

He added that “the old school Treasury” he joined 25 years ago is very different and this iteration of the department seems to be more like an “offshoot of the Australian Taxation Office”.

“It's also full of people who are reaching to raise taxes on investors. In fact, Jenny Wilkinson, the Treasury secretary, will no doubt be making that case when she speaks at the reform summit next week.”

“There would be people in Treasury who believe that we should be taxing investors far more than we are. Treasury puts out a tax expenditure statement every year, which has no credibility whatsoever, but purports to make that point that's always seized upon by the class warriors, the Labor Party and the Grattan Institute.”

Pearl said the intent of the round table also seems to have been hijacked, and noted that when the prime minister first announced the roundtable, it was to focus on lifting productivity.

“Days later, Jim Chalmers reframed it as one on budget sustainability, and we know budget sustainability is Canberra speak for higher taxes on working people.”

“I don't think Ted O'Brien, the Opposition Treasury spokesperson, should be at this summit. It's a trap for him. He either goes along with a consensus to raise taxes on middle class people, or he stands aside from it, and Jim Chalmers and Anthony Albanese can accuse the opposition of being obstructive.”