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State Land Tax Coming?

Discussion in 'Property Market Economics' started by 2FAST4U, 2nd Dec, 2015.

  1. 2FAST4U

    2FAST4U Well-Known Member

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    The excuse to tax the family home for which states have been waiting

    It would be a brash move but not as outlandish as it seems, particularly if the GST remains at 10% and the Federal Government insists on trying to create a fiscal surplus (or at least reduce the big bad evil deficit). If they do introduce this I for one will be hiking up my rents.
     
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    That'd be interesting because of the demand it may put on rentals if people choose that as an alternative?

    Or just include family home in aged pension assets test. If less taxes are paid out then less needs to be taken in.
     
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  3. JacM

    JacM VIC Buyer's Agent Business Member

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    Government declares your property has suddenly risen in value. You're pleased. Then you get the tax bill. Hmmm.

    One hopes that properties purchased with stamp duty applied will not be slugged a second time with this (new/increased) land tax for the rest of their lives.
     
  4. Kangabanga

    Kangabanga Well-Known Member

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    this will affect a lot of wealthy voters and be politically unfavourable. unlikely to come to fruition. so far there haven't been many policies coming out of Canberra that impact this group too much.
     
  5. wogitalia

    wogitalia Well-Known Member

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    That's because they are very much a vocal minority. It's about 5-10% of the population that make up anything you could classify as wealthy (90% of the population live on the average salary or less remember), as a result they are a group that unites everyone else, can better afford to pay more and do not have sufficient numbers to make real changes in vote results. In short, they're a very easy political target, especially with tall poppy syndrome reaching epidemic levels in Australia.

    Now whether a system that continually keeps dipping into the high achievers pockets is a good long term system is a totally different question but politics has become very short term focused so they aren't even considering things like that... just going for the quick cash grab.

    Land tax remains the most efficient and productive tax in Australia, despite being hamstrung by main residence exemptions, it's one of the few taxes that I actually support expanding.
     
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  6. twistedstats

    twistedstats Well-Known Member

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  7. Johnny Cashflow

    Johnny Cashflow Well-Known Member

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    This would increase prices im pretty sure.

    Would see a lot of people selling down and then wanting extra to pay for the tax bill
     
  8. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Again ? I read theis every few years. It took 5 years to replace the fire services levy from insureres to coucil rates. And everone agreed to a revenue +ve idea.
     
  9. RetireRich101

    RetireRich101 Well-Known Member

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    on seperate question
    The NSW LPI from globe.six.nsw.gov.au, the land value estimate is every last few years going to 2014.
    Is there anywhere I can find the land tax value for 2015 that OSR uses

    I know I will get the land tax bill anytime soon, but I just want to guesstimate how much I am up for.
     
  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    Not sure about nsw, but shouldn't it be on you council rates? Where did it sit on last years land tax bill?
     
  11. Tim86

    Tim86 Well-Known Member

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    So the premise is that if government puts in services then your house is worth more. But they claim you dont pay tax on this increased value.

    However when you sell you do pay more tax if your house is worth more. Thats what capital gains tax is. And as a buyer you pay more tax if the house you are buying is now worth more. That is what stamp duty is.

    So the government doesnt miss out on sharing in the value created to properties through infrastructure improvements.

    The only person who they miss out on it from is the person who purchased in the area and never sells. But that person purchased in the area before there were the infrastructure investments because the current infrastructure suited them fine. Why should that person pay more because the government just put a new train line in that they will never use? It makes sense to tax through stamp duty as that person is buying into that area because they appreciate the new infrastructure.

    If this policy goes through then I will be expecting an ongoing payment of a few thousand dollars a year from the government. When I purchased in my suburb we had a public school. The government closed it. Now we have lost value on our house because of the loss of infrastructure. Following the governments logic I am now entitled to a tax refund that compensates me for the loss of infrastructure and resultant loss of value in the house.

    And what about when the government builds a prison in the area. Do we all get money back because its gone the other way and the governments actions have reduced the value of our property?

    Just raise the damn gst. You spend more you get taxed more. Simple.
     
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  12. wogitalia

    wogitalia Well-Known Member

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    This would be great except that you don't pay land tax or CGT on your principal place of residence under the normal circumstances so those who benefit most from it actually pay nothing for it.

    The stamp duty part is correct but that is paid by someone moving into the area, so it's already covered.

    Land tax is by far the best tax Australia has, it's also probably the most underutilised. The amount of exemptions that apply to it mean people avoid a tax that shouldn't be avoidable. The rate is so low on it that it doesn't really serve it's purpose either.

    Land tax is the tax that people should support being raised above all others. It's the best tax we have.

    Of course a couple of other taxes should be removed and you can be sure governments aren't going to do that either (looking your way Payroll Tax and Stamp Duty).
     
  13. Gockie

    Gockie I'm an ISTP-A female, so I might be a bit quirky! Premium Member

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    Bizarre. I assumed it would have been but it doesnt seem to be on the Hornsby council rates notice.
    NSW LPI mail out land value assessments though every now and again and you can get it off their website (with a bit of effort)
     
  14. Azazel

    Azazel Well-Known Member

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    NSW doesn't need it at the moment, but after the asset sales money is gone, and if the Sydney downturn continues - meaning less stamp duty, CGT revenue - they probably would go for it.
     
  15. twistedstats

    twistedstats Well-Known Member

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    Not sure how that would actually occur. Would actually provide another incentive for people to downsize to reduce land tax bill on their PPOR.

    This is how I see it. The Federal and NSW budget will continue to worsen presenting greater regulatory risks to housing.
     
  16. Big Red

    Big Red Well-Known Member

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    Personally, its a case of government spending more money than it has. I.e. Spending on welfare ( pensions and centrelink).

    No matter how much GST/CGT/ tax they raise there is no stopping this. I don't believe they will ever repaying the debt/ reduce the deficit.

    Think about it long term you have an ageing population who is now reliant on the government when they retire, you have people out of work/ in the dole cycle who aren't working. You have a smaller percentage of people working than on pension/dole.

    How on earth is this going to be sustainable?

    Raising the GST works on the assumption that people will spend more. If everything increases by 5% where is the extra money going to come from if incomes don't increase? All that happens is spending shifts from going into the retail store owners pockets to the government. This takes more money out of the economy and inhibits growth.

    A few suggested alternatives to raising GST/ State land tax:

    1. Encourage people to save tax effectively into their super to provide for their retirement and put a cap. I.e. 1 m in super taxed at 0% and after than it goes up so that it is equally fair.
    2. Encourage people to innovate and go into business. We needs to create jobs and growth not create workers only.
    3. Stop focusing on raising taxes. Taxes are for when people are making money not when the economy is struggling. I.e. mining is slowly down and I assume some of our larger manufacturers will put out/ reduce production over time. In Vic/Sa Toyota/Ford/Holden.

    If people work all their life and believe a pension is their reward for their hard work. Then we will have a huge problem in the future and no amount of GST raising will solve that.

    State land tax is an erroneous idea based on false thinking. Think about all those people who are retired/on pension/ on dole. What hope do they have paying this tax? Think about how working families are going to have to budget for this additional tax each year?

    The thinking behind this is they as a government have come to the realisation that property prices are not going to be as high as it was before and the stamp duty gravy train might be coming to a very sharp slow down. They are now focused on "milking the cow". I.e. all these people are now living in expensive houses and are not paying their "fair share". Again, all this does is reduce the disposable income of households and thus reducing the $$ in the economy.

    What should states do?
    1. Focus on revenue creating projects - .i.e. state owned business that are running profitably.
    2. Remove contractors and put in full time staff on reasonable wages ( i.e. paid fairly based on output). It actually costs the tax payer more when culling staff because all they do is re hire them as contractors on double the money.
    3. Focus on long term projects using lending at very low rates.
    4. Stop selling revenue producing infrastructure to create ( Port, electricity etc).

    My thoughts on it
     
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  17. wogitalia

    wogitalia Well-Known Member

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    I agree with most of your post, tend to disagree here though.

    Firstly I think there should be a threshold on the main residence to which Land Tax wouldn't apply (as opposed to now where it's 100% no matter what), either way the idea would be to not hinder those living in "affordable" areas already, only those who live in the "best" areas would be hit with a land tax that aren't already paying it.

    After that, the idea of land tax is to make the use of land and resources more efficient. If people are living in a house they can't afford to pay the land tax on, you have to question why they're living on that land. It implies that they aren't working and wasting the most valuable land that could make the whole economy more efficient (all those retired people that live walking distance to the city compared to everyone having to drive from outer rings is an infrastructure nightmare, people should retire to the outer rings for efficiency sake and if a land tax encourages that, it's a good thing).

    The next people would be those who bought houses they can't really afford, by again forcing those people to move to areas they can afford you actually inject money into the economy because instead of 50% of their income going to dead interest that does very little for the economy it might be 30% of their income and the other 20% now becomes disposable, alternatively those people are encouraged to start a business to actually be able to afford where they want.

    The other group that get hit are investors/speculators that hoard property in the hopes of capital gains/rental returns. These people are effectively stopping other people from using that land, I see no good case for them not paying extra for that right.

    Land tax is the best tax we have, it's about the only tax that encourages efficiency in how it works. It's just about the only tax you will hear me support increasing (GST has a case but only if it's in sync with significant income tax cuts).

    Agree thoroughly that government expenditure is a bigger issue than taxes, you can't keep raising taxes to offset excessive expenditure, it's a no win system. Unfortunately Australia has a serious spending problems because our politicians are at the mercy of vocal minorities who will lobby against any expenditure cuts whether they're reasonable or not (see the reaction to the GP thing a couple of years ago). Land tax however is the one tax I do support increasing and expanding... of course I only support it if it coincides with the removal and reduction of other taxes, I 100% support increasing land tax and removing payroll and stamp duty even if they increase land tax so that they get more than they do from those taxes currently because they're both horrific taxes and the overall efficiency gains from removing those would be far greater benefits than paying a bit more tax now for example.
     
  18. Ed Barton

    Ed Barton Well-Known Member

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  19. twistedstats

    twistedstats Well-Known Member

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    I see this will have the effect of lowering house prices rather than increasing rents.