Another day, another parliamentary inquiry
The House of Representatives economic committee inquiry into Home Ownership was opened with fanfare and encouraging comments by chair John Alexander (Liberal, Bennelong):
“Some have said we are on track to becoming a Kingdom where the Lords own all the land and the biggest Lord will be King and the enslaved serf tenant is paying rent to the Lord to become wealthier. Is that an over-dramatisation or is it very, very close to the truth?”
This sits next to Prosper’s view that rent is a private tax landowners charge tenants, and land is the best tax base available to government. Could the committee see moving tax off labour and enterprise onto land would turbocharge economic activity?
Catherine Cashmore and David Collyer presented to the committee for Prosper Australia in Melbourne Friday 14 August.
The causes of Australia’s misery were outlined in our introductory remarks.
* Restrictive planning that directs buyers to a handful of locations
* A massive infrastructure deficit that makes greenfield land most unattractive,
* A staggering appetite for debt
* Very bad tax laws
We can fix the planning rules. We can build more infrastructure. We can regulate the banks to better judgement. But unless we change how and where we tax ourselves, land price booms and busts will continue to destroy lives.
Prosper Australia’s submission urges the Abbott government to impose a one per cent federal land tax – fully rebatable against state land tax paid – to oblige the states and territories to stop using taxes we know cause genuine economic injury.
The Commonwealth is entitled to argue this intervention is for sound economic reasons and dissipate the inevitable rentier political abuse.
We talked about planning and urban boundaries and Precinct Structure Zones; using land tax to prompt developers to sell rather than land-bank; and migrating Melbourne from a radial layout to a matrix.
At the end I raised Prosper’s key theme – Stamp Duty costs taxpayers $1.70 for each dollar raised, while State Land Tax costs 90c. Tens of billions of dollars are cast on the ground every year by Stamp Duty. A 1 per cent federal nil-exemption land tax, fully rebatable against State Land Tax paid, would oblige the states and territories to heed the consistent advice from the federal and state Treasuries: migrate taxes to land; end the deadweight losses in bad taxes like Stamp Duty, Payroll Tax and the cursed GST. Our country will flourish.
Will the committee take this advice back to government? We don’t know. But they cannot claim innocence about the very bad taxes imposed on us.