Page 2944 - Week 07 - Wednesday, 30 June 2010
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There are a number of other things that we would like them to do—that is, to find ways of ensuring that they do not levy this massive tax on homes in the ACT—but they are for a debate on another day. This is about getting some information for industry and for the community because there is a lot of uncertainty there at the moment and there is no doubt that there is significant uncertainty about what is happening with this tax.
It is worth reviewing the fact that the government has for some time been moving down the path of codification. The codification in principle is supported by industry. It does remind one a little bit of the mining tax and the debate that is going on with that. The mining tax is, in principle, I think, supported by industry; it is just totally the wrong tax. The industry do support the idea of a profits-based rent tax, but how much and how it is levied is the problem. That is similar to what we have here, although there is added complexity here, so it is worth going through a number of the different aspects.
The motion notes that the ACT government is claiming to have failed to collect the change of use charge properly since an arrangement or deal was entered into in approximately 2003. That needs to be explained. The government actually needs to put the documents on the table that show that there was a deal or an arrangement entered into which apparently led to the ACT government not receiving the taxation revenue from the change of use charge that it apparently should be getting. That case, in our opinion, has not yet been made. It has not yet been made by the Treasurer; it has not yet been made by the government.
The motion goes on to note that a massive increase in the charge amounts to a massive tax on housing. That is a statement of fact. There is no doubt that, if you increase the charge significantly, as the government is proposing to do, that cost will be passed on somewhere. Indeed, we had Treasury officials confirming this during the estimates process. They confirmed that there are only three ways it can go, and they could not say where it would go. There are only three ways that this very large increase in tax can go. It can be wiped off the value of people’s existing properties—that is, they will get less than they otherwise would have got as a result of this tax—it can be borne by developers and builders and in some way absorbed, or it can be passed on to buyers.
Mr Barr: Or a combination of all three.
MR SESELJA: Indeed. But they are the only ways that it can go, and the Treasury could not say to us whether all of it or part of it would go to buyers or all of it or part of it would be absorbed.
Mr Barr: The market is dynamic, Zed.
MR SESELJA: Indeed it is, but this is part of the uncertainty, in that the modelling really has not been done as to how it will go. But I think it is a fair bet to say that a significant amount will be passed on to buyers. I do not think that anyone would argue that buyers are not going to cop any of this massive increase in tax. The idea that developers can simply absorb it I think is fanciful, particularly given the lending constraints and the financing constraints that people are experiencing at the moment.
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