Australia’s capital gains tax discount will cost nearly $250bn over the next decade, more than twice as much as the concession has cost in its entire 25-year history.

As the federal government considers scaling back the 50% discount to help first home buyers, new figures from the Parliamentary Budget Office show the discount has cost the budget $205bn in lost revenue since its introduction in 1999.

But Australia’s soaring property prices and other investor demand will push the total price tag to $247bn over the next 10 years.

Commissioned by the Greens as part of a pressure campaign on Labor to wind back the Howard-era discount, the figures show the top 1% of taxpayers will receive nearly 60% of the benefit this financial year.

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Retirees without taxable income and people earning more than $362,900 are the biggest beneficiaries, according to the PBO analysis.

The 50% capital gains tax discount applies to any investment held longer than 12 months. Introduced by the Howard government in 1999, it has been blamed, along with negative gearing rules, for promoting housing as an investment mechanism for wealthier Australians over the rights of would-be owner-occupiers.

Federal Labor went to the 2016 and 2019 elections promising to pare back the discount, but lost both times to the Coalition.

The federal Treasury modelled changes to negative gearing rules in 2024, finding curbing CGT deductions for investors would have more impact on lowering house prices, though neither policy would help boost housing supply.

Senior Labor figures have left open the possibility of changes to CGT in the May federal budget, a move the Greens would support as part of efforts to boost home ownership.

But on Thursday, cabinet ministers stressed there had not yet been any change in Labor’s policy.

Treasurer Jim Chalmers told Guardian Australia last week he was “open” to big ideas on tax reform and would apply a laser-focus on intergenerational inequity in Labor’s second term.

It is unclear whether the new rules would be limited to property investors. Labor could also grandfather changes or introduce a tiered model to make the discount less generous.

Greens senator Nick McKim is chairing a parliamentary inquiry into CGT arrangements which is expected to recommend less generous rules for property investors.

“The evidence keeps piling up against the most unfair tax rort in the country,” he said.

“Every time you crunch the numbers it just gets worse.

“Instead of supporting productive investment, the CGT discount is now overwhelmingly used to subsidise speculation on existing properties, driving up
prices and making home ownership even more difficult for renters.”

McKim challenged Labor to fix CGT as part of its promise to address intergenerational inequality in the Australian economy.

Last month, the NSW Treasury said the current CGT rules had pushed up property prices and damaged housing affordability, warning the discount benefits wealthy investors at the expense of first-time buyers.

The CGT and other tax concessions including negative gearing “skew incentives towards property investment” and undercut policies, including first home buyer assistance, it said.

Wentworth MP Allegra Spender – who led development of an independent tax white paper in the last parliament – called for CGT changes to be considered.

“I’m glad the treasurer is open to reform but changing one tax can’t overcome intergenerational inequity or housing affordability,” she said. “Tax changes should be revenue neutral, with increases balanced by reductions.”

Research by the Grattan Institute suggests ending the CGT discount without grandfathering the new rules could be worth as much as $6.5bn a year.

The Greens-led CGT inquiry is due to hold hearings later this month, ahead of a final report due by 17 March.