Page 3451 - Week 08 - Thursday, 23 August 2012
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The simple reality is that we have limited options for taxation. We have no minerals and mines. Our major asset is land, and our most efficient tax base is land. The best and most efficient way to generate the revenue needed to deliver government services is through our rates.
Transitioning from one scheme to another will necessarily mean that some people miss out on the benefit of the reduction in stamp duty and pay the increase in their rates. There is no way around this, and no change like this will ever be able to be perfectly distributed. What I think the plan does as well as possible is limit the windfall gains and losses. I think that the proposed 20-year time frame for the implementation of the changes is a reasonable one.
The other important feature of the proposed changes is that they make the scheme more progressive. That is, those in lower value properties will pay a lower rate of tax on their properties than others. Certainly I realise that this is not perfect and that the value of housing will not always directly correlate with the income of the occupants. This is why it is so important that we have appropriate concessions and deferral provisions in place.
The Greens are very pleased that options are being brought in for those who are asset rich but cash poor. The new provisions will allow those in that circumstance to defer their liability.
The tax changes are the most controversial part of the budget, and I have received quite a number of constituent inquiries about the changes, some supporting and some opposing. I think it is disingenuous just to talk about the increase in rates without looking at the broader changes proposed. As I said, the way the change is distributed can never be perfect, and as much as people say it is not fair to suddenly increase their rates, equally it is not fair that those who buy a house but do not live in it very long and have to move because their circumstances change should be paying an extraordinary amount more in tax than those who stay in one house for a longer period of time.
This is a very significant reform. It is what all the experts are telling us to do. Everyone from Ken Henry down agrees that we should move from stamp duty to land tax. Removing distortionary taxes and replacing them with a stable revenue base that allows us to accurately forecast our revenue and encourages the efficient allocation of our housing and land resources is a good thing. We all know that stamp duty is a real barrier, particularly to downsizing, and that as our population ages we need to better allocate our housing resources. It does not make sense to have older people living in large houses that do not meet their needs when they could live closer to services in houses better suited to their needs but cannot because of the barrier created by stamp duty.
I should also mention the land tax changes for lower value rental properties. This is similar to the measure identified in the parliamentary agreement. In the context of the broader changes, I hope that it does have an impact on rental affordability. I would say that I do have a slight concern that part of the impact of the change will be to
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