Baillieu’s new Building Tax and Land Subsidy



29 August 2012

The Baillieu Government has deliberately failed in its reforms to the Fire Services Levy announced today. A charge on land and buildings will replace the levy on fire insurance and end the ‘free ride’ enjoyed by the uninsured.

“The failure is one of logic and economic principle,” Prosper Australia Campaign Manager David Collyer said today.

“This reform means Victorians have a new building tax while the value of our fire service boosts the price of land.

“Fire services protect buildings. They give citizens the confidence to build – and build bigger and better. But that is not where the tax base lives.

“Like all civic amenities, the benefit of the fire service is capitalized into land values. Put another way, a quality fire service raises land prices regardless of whether a building is put up or not.

Adding the charge to municipal rates has the look of a proper connection between property services and property charges. But municipal rates are based on Capital Improved Value, not the superior Site Value method.

“The natural tax base for this emergency service is land. The Victorian government should use the existing State Land Tax registry and machinery to meet the necessary cost of a quality fire fighting service.

Municipal councils are angry at becoming Baillieu’s tax collectors. They would be doubly so if they appreciated this subtle but important distinction.

Media Contact: David Collyer 0413 248 193

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.

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