TAXPAYERS owed more than $227 million in land tax by the end of February – a 20 per cent increase since last year, Office of State Revenue figures reveal – with a Herald investigation finding that much of the pain is being felt in the Labor Party’s backyard.
The debt rise comes after the State Government lifted land taxes by 25 per cent on properties valued above $2.25 million at the onset of the recession in November last year.
This is another sign that the NSW housing market is about to unravel. Speculators in Labor safe seats, no doubt many of them investing in formerly ‘affordable’ suburbs, have made the most of the Land Tax threshold, which starts at $368,000. This means for a $500,000 land and house property investment in Sydney, the speculative investor would owe $2112. Not much. This property advertised in Parramatta for $479,000 would owe $1904.
Soon the financial pressures will add up and these vacant and under-utilised sites will be sold. The added supply will push prices down and thus assist affordability, breathing hope into the lives of the youth.
But small business must be hurting. The Rees Government gave a signal to the market that they prefer small business over speculators by reducing Payroll Tax from Jan 1 by 0.25% to 5.75%.
To avoid this sort of scare campaign by the Property Council, the Rees Government should flatten the Land Tax and lift it so that Payroll and the regressive GST can be removed. Prime locations such as Pipers Point have a higher locational value, rendering obsolete the need for differential tax rates. This will mute government criticism for using Land Tax as a wealth tax. It should be aimed fairly at all occupiers of land as a ‘beneficiary pays’ charge. Hands up for those who want to abolish income tax? This attitude would help us move away from the casino economics mentality that dominates policy makers.
Where is the hard yakka in shuffling paper?