Higher than expected revenue projections over the next two years have prompted the state government to cut land tax by 7 per cent, Treasurer Troy Buswell announced today.
Mr Buswell said the cuts follow a decision by the Department of Treasury and Finance that income from land tax and metropolitan region improvement tax (MRIT) was estimated to be $41 million higher than planned this financial year.
Income over the next four years after fiscal 2009 from the tax could potentially reach $192 million as a result of an under-estimation of final land valuations, Mr Buswell said.
Land tax and MRIT are forecast to generate some $650 million this financial year.
According to government figures, land tax on land valued at $500,00 will drop by $20 to $180 while land valued at $1 million will see a reduction of $70 to $630.
If the property is in the metropolitan region the savings will be a further $20 for land valued at $500,000 and an additional $70 for land valued at $1 million.
Mr Buswell said land values on which the 2008-09 tax scales were modelled had been revised up significantly since the last State Budget was finalised.
"This has put us in a position where a reduction in the tax rates is the right thing to do in order to keep revenue to the level that was budgeted," he said.
The move has been welcomed by the Property Council of Australia, which said the move will compliment other actions by Australian government to sustain economic fundamentals.
"It is very pleasing that the new State Government has listened to the huge concerns in WA over windfall gains in property taxes not being passed back to the community," the council's WA executive diector Joe Lenzo said.
"Land tax was set to blow-out in WA as a result of the lagged effect of property value re-assessments.
"The decision by the State Government to cut land taxes will encourage investors in the provision of much needed affordable housing. It will also provide timely relief to small businesses that lease or own property."
Mr Buswell said the government is aiming to issue assessments in late November, with legislation to be introduced as a matter of priority when Parliament sits for the first time on November 6.
