Page 3899 - Week 12 - Thursday, 29 October 2015
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There is some market growth—we all understand that—but that does not account for a doubling in the take of general rates and land tax. In response to what Mr Barr said about it being effective, what it may be effective in is driving a business to move across the border. The article also stated:
Efficiency in tax design is construed to be synonymous with the inescapability of a taxpayer meeting their payment obligation, but this would merely give rise to the “fiscal trap” of gradually increasing liabilities especially if a broad-based land tax is not indexed for asset price inflation.
There is also the threat that imposing higher rates of effective tax on land, and applied to a broad base, will simply reduce the relative attractiveness of investment in land in Canberra, compared with other asset classes.
Alternatively, investors would be encouraged to invest more across the border, in Queanbeyan or greenfield sites such as Tralee, in the face of uncompetitive ACT tax levels in the longer term.
The report goes on to say:
… it is not necessarily so that owners of the most valuable land always have the greater capacity to pay tax. For example, commercial properties may be owned by trusts and superannuation funds on behalf of small investors and fund members, the latter not necessarily wealthy themselves.
It goes on to say:
The latest federal tax discussion paper noted levying land tax at progressive rates on total landholdings “introduces a bias against large investments in residential property and discourages institutional investors from investing in private rental housing”, with consequently adverse effects for those on lower incomes.
Given landholding is not an accurate reflection of the ability to pay, moving toward a proportional rate tax structure instead would represent a much better outcome on both efficiency and simplicity grounds.
It finishes with:
The sober reality is that tax reform in Canberra and elsewhere will turn out to be more like an unmitigated tax grab in coming years, with home owners and commercial property holders paying a heavy price.
I will repeat the conclusion from the article:
The sober reality is that tax reform in Canberra and elsewhere will turn out to be more like an unmitigated tax grab in coming years, with homeowners and commercial property holders paying a heavy price.
We are already seeing that. We are already seeing that the Treasurer and Chief Minister has backed away from getting rid of conveyancing. He refuses to tell us where and when and how that will go. He refuses in his 20-year tax plan to tell us
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