Land Tax Reform

[PropertyozSA]

S-A Community

Article on AdelaideNow indicates Government will announce land tax reforms this arvo (http://www.news.com.au/adelaidenow/stor ... 01,00.html). Will let you know more when it comes through.

Cheers

Nathan

[PropertyozSA]

All right the Government has just announced its land tax reform package.

While it is not the full package that the Property Council has been calling for, it will provide some relief at the lower end.

Essentially the Government has committed to:

1. An increase in the base threshold from $110,000 to $300,000 from 1 July 2010;
2. Adjusting the thresholds and rates above $300,00 so that those still liable for land tax receive up to $1,245 in relief compared to what they currently pay; and
3. Commit to raising all land tax thresholds in line with the Valuer General’s annual assessment of average land value inflation from 2011-12.

Nathan

[Howie]

Thanks for that Nathan.

Here's a copy and paste of the AdelaideNow article

SA Treasurer Kevin Foley to announce land tax changes
Article from: The Advertiser

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GREG KELTON, LAUREN NOVAK, DANIEL WILLS and RUSSELL EMMERSON

January 28, 2010 11:44am

MORE than 75,000 investors will be spared from paying land tax under changes announced by Kevin Foley, who also will spend an extra $318 million on health.

The Treasurer has announced the threshold for paying land tax will be increased from $110,000 to $300,000 from July 1 while the extra money for health will be provided to meet increasing demand on the public health system.

Mr Foley has told a media conferences the changes have been made possible by "better than anticipated revenue returns". The land tax change would cost around $52 million over the next two to three years.
Homes are taxed based on their value at June 30 each year.

The Valuer-General's valuation feeds into council rates, emergency services levies and land tax.

While people's primary places of residence and rural properties are generally exempt, the State Government recently targeted aggregation, where different owner profiles were used to confuse the levying of land tax.

These changes, combined with rapid increases in property values, resulted in significant hikes in land taxes for some owners last year.

Speculation had been rife in political circles that Mr Foley would announce the changes when he gives details of the Mid-Year Budger Review for 2009-10 and the final Budget outcome for 2008-09.

These financial reports are crucial for both major parties in framing their spending on election promises.

The Opposition, which has already announced details of their land tax policy, has been pressing for the release of the Budget documents since the middle of December.

All other states, and the Commonwealth, released their reviews before Christmas - even Tasmania which goes to the polls at the same time as SA in March.

The Liberal Party had promised to cut land tax for 57,000 South Australians if elected in March.

Opposition Leader Isobel Redmond has pledged the party's land-tax policy will lift the base threshold from $110,000 to $250,000.

She said the policy would cost $130 million over four years but would also mean people with properties valued at more than $250,000 would save up to $420 a year.

She said recent figures showed South Australians pay 62 per cent more in land tax than the average Australian and seven times more than West Australians.
Property Council of Australia SA executive director Nathan Paine welcomed the pledge.

"The Property Council also strongly supports the initiative to index thresholds to average land value inflation, providing more certainty to investors," he said.

Mr Paine said the proposed cuts would provide limited relief to the commercial property sector which was "a critical generator of investment and employment".

[Aidan]

I'll go out on a limb here and say this is bad news for the state! SA needs to fund a lot of infrastructure, and if we always have to wait for the federal government, we're going to be disappointed. So we need to levy taxes.

Land tax, if well designed, is the most benign of all taxes. It doesn't increase the cost of doing business, because land leasing costs are set by supply and demand. If land tax rises, the land s correspondingly cheaper. This is known as Ricardo's law of land rent.

Land tax certainly does need reform - the recent situation when land tax remained high despite the economic downturn proves that. But this "reform" is bad for state finance, and because that will negatively impact on the rate of infrastructure provision, ultimately bad for business.

[monotonehell]

I'll go out on a limb here and say this is bad news for the state! SA needs to fund a lot of infrastructure, and if we always have to wait for the federal government, we're going to be disappointed. So we need to levy taxes...

I'm guessing that before they announced this they had already "balanced the books" elsewhere with respect to tax revenue.

[Aidan]

I'll go out on a limb here and say this is bad news for the state! SA needs to fund a lot of infrastructure, and if we always have to wait for the federal government, we're going to be disappointed. So we need to levy taxes...

I'm guessing that before they announced this they had already "balanced the books" elsewhere with respect to tax revenue.

For this year, and probably next financial year, of course they have. But firstly they haven't, and can't, balance the books decades in advance, and secondly there are still other state taxes that better deserve to be cut.

[PropertyozSA]

Dear S-A Community

I am pleased to announce that today the Property Council has released its Tax Manifesto; calling for significant property tax reform in South Australia. The full report can be found here http://www.propertyoz.com.au/sa/Article ... 16&id=2592 and I have included the Summary of Recommendations below:

Land Tax
1. Increase the maximum threshold to $2.5 million at a top rate of 2.5 per cent.
2. End land tax aggregation.
3. Cap annual valuation increases to a maximum of 30 per cent.
4. Reform the valuation appeals process.
5. Amend the Commercial Leases legislation to enable property owners to pass on land tax as an outgoing.

Stamp Duty
1. Reform Stamp Duty on Non-Residential Conveyances to:
a. Short term: Reform the rates and thresholds to bring South Australia into line with New South Wales; and
b. Long term: abolish Stamp Duty on Non-Residential Conveyances.
2. Exempt corporate reconstructions from stamp duty.
3. Exempt the GST component relating to the sale of a commercial property or a business.
4. Reform stamp duty and Corporate Reconstruction Exemption Guidelines to ensure national harmonisation.

Council Rates
1. Deliver universal consistency in the collection of council rates in respect to matters of valuation and differential rating.

Emergency Services Levy (ESL)
1. Cap any ESL funding increases by CPI.
2. Guarantee existing levy caps remain and are limited to CPI increases.
3. Conduct an audit of the previous years’ ESL budget and spending plans to determine necessary rate levels.
4. Examine opportunities to incorporate the money raised for the ESL into an existing tax to achieve greater efficiency.

Water Rates
1. Reform water connection charges to promote water-saving initiatives.
2. Introduce user-pays pricing to allow the market to drive water usage rates.

Cheers

Nathan