Page 3982 - Week 13 - Thursday, 17 October 1991

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(5) Is the Treasurer able to advise what land tax applies in NSW

and whether there is any incentive for Canberra investors to

purchase real estate outside the ACT following the

introduction of the land tax.

Ms Follett - The answer to the members question is as follows:

1) What research and/or studies were conducted by the Treasury

or any other ACT government agency into:

a) the operations of land taxes in other Australian states and

territories

The land tax policies and administrative practices of all States- were extensively studied by the ACT Treasury in the course of the development of the proposal to extend ACT land tax to income earning residential property. Additionally, the Commonwealth Grants Commission conducted an extensive study of revenue raised from land taxes in Australia. The Commission in its Fourth Report on ACT Financing (1991), concluded that, with respect to land tax, the ACT effort in revenue raising in 1989/90 was only 45.5% in comparison with the standard states. In dollar terms, the shortfall in ACT revenue from land tax was $11.5 million. The Commission attributed the below standard revenue raising effort to the relatively low rate of land tax (then .75% of unimproved value) and the fact that the tax was restricted to commercial properties, whereas all states tax rented properties and some also taxed residential properties. This indicated the desirability of increasing the land taxation level (now 1% of the unimproved value) and broadening the land tax base.

b) The impact of the land tax on the availability of private

rental accommodation in the ACT.

Research by the ACT Treasury indicated land tax on an average residential investment property with a market value of

$150,000 and an unimproved value of $40,000 would result in

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