Prosper Australia

photo credit: Dystopos

The Brumby government’s haphazard manner in dealing with Melbourne’s ‘urban sprawl forever’ attitude is straining government revenues. The desperate actions following from this with the $95,000 Growth Areas Infrastructure Contribution (GAIC) are the result of the ignorance of more efficient and equitable revenue raising systems. The GAIC has been called a Land Infrastructure Tax.

Such lump sum charges are a disaster waiting to happen. Similar to Sydney’s ‘Developer Charges’, lump sum taxes will be passed on. There is no doubt about it. Reports are coming through such as:

One caller to ABC Radio said his parents would be left with only a couple of hundred thousand dollars on a large property they had owned for more than 20 years.

Other landowners fear the proposed levy will dramatically reduce their property’s resale value.

These farmers will simply withhold this land until it’s price increases by at least $95,000 per hectare.

A fairer way to ensure that landowners pay for the benefits of a new rail link would be to charge a percentage on all land values. A Land Value Capture system would ensure that prime locations could not be speculated upon with reckless abandon. Nor could they be withheld until the landowner’s asking price is met. This would ensure that successive landowners over the life of the infrastructure contribute something back to the government in respect for this new service.

One generation of buyers is not hit with the full bill.

The above quote qualifies our addiction to windfall gains. Why should a handful of families benefit at the expense of people battling for a basic human right – for the right to a roof over their head? Who prefers being taxed for working but yet rewarded for owning large valuable tracts of land? At the same time we are sympathetic to the above landowners – Brumby is asking for trouble with this sort of slapstick charge.

The 2030 boundary is a farce. It forces up land prices inside the boundary, and forces them down outside the boundary – that is until lobbyists manage to bribe Brumby to extend certain sections. Why were land tracts bought prior to 2005 exempted from this new charge? One can only imagine…

This issue highlights the need for an educative process on the importance of Land Tax – especially with the Bailleu family lining up to storm into public office at the next election.

photo credit: 3blindmice

Land speculators with portfolios in Coolaroo, Cranbourne East, Caroline Springs, Nunawading and Parkville will be celebrating with their second free lunch in as many weeks.

Brumby’s announcement of new train stations in these suburbs has delivered windfall gains to those speculating on future infrastructure projects. One just needs to visit Coolaroo to see a number of vacant or under-utilised sites laying in waiting for such an announcement.

This handout follows hot on the heels of the 134,000 lot expansion in the 2030 boundary last week and the 90,000 re-zoning Brumby performed for the property lobby in March this year. It certainly rounds off a productive year for Melbourne’s real estate lobby. Surely there is no doubt as to who are the biggest contributors to state government coffers?

Whilst some are laughing all the way to the bank, commuters are befuddled at why they are facing a 5% increase in rail fares during an age of climate change.

These two extremes could be neutralised via a Land Value Capture system. If all landholders in the vicinity of the new train stations were to pay 5% of their land value back to the government over 20 years, then future rail expansions could occur within the time frame that future generations expect. This is how Japan and much of East Asia has profitable rail systems.

This handout is especially concerning when the 2008 I Want to Live Here report found thousands of inner city properties lying vacant. Why the need to stretch our infrastructure when central locations could be used more effectively with a more logical tax system?