House rules

THE more I look at the land tax proposal from the WA Labor party, the more I cringe at the issues that arise from it.

Pinning people with a tax for owning land is a legitimate revenue-raising avenue for government, but Eric Ripper has thought only at a short-term political level on the current concept he is trying to push into the budget.

In its existing form, the move is either short-sighted or underhand. Either way it is disturbing.

Let’s make some things clear about such a tax. I have some sympathy for the concept of a land tax – which already exists is some form – just as I had for a GST before it was introduced.

Both these taxes, as potentially fairer and broader revenue raising techniques, have merit if, and only if, they coincide with the removal of other unrelated taxes as compensation.

Unfortunately, while also creating a ridiculous amount of paperwork, the GST arrived with only a minimal reduction in income taxes when it replaced a host of sales taxes last year.

Bracket creep or a hungry Federal government will soon erode those minimal income tax gains, while we will remain lumbered with a new tax. A GST, once in, is also much easier to ratchet up a notch or two to levels that other nations have introduced.

The land tax is even worse because it comes with no hope of compensation.

It too will slowly spread to form a wider net as demand raises land values faster than CPI, and who believes future State Governments will be able to resist spreading the tax down through the ranks.

Returning to the positive side, both the GST and land also have the potential to cut out the black economy, if used properly.

There is a running joke about there being two tax-free thresholds in Australia – the one below $6000 and the one above $1 million.

By all accounts the GST has failed to deliver on this front. Whether due to its mish mash hybrid form or simply due to resentment over the big amount of paperwork involved, it has failed to shut down the cash economy.

Land tax should be a different proposition, in that it is pretty hard to hide land ownership. But, of course, it is amazing what a good tax planning can do these days.

Coupled with relatively high income taxes, these new taxes continue to provide incentives for tax avoidance.

There is at least one other problem with land tax aimed at the so-called rich.

Once again, it relates to our competitiveness with other regions.

Owning a $1 million property is a dream many people aspire to. Perth is a place where such a price can still buy you a decent hunk of land, not just an apartment in a high-rise.

It may not be Mr Ripper’s aspiration but a new tax on people who achieve is yet another discouragement for them to stay here or return here. And chasing them away will not help us diversify our economy.

No flies on us

IT is good to see further proof that good management pays dividends, even if it takes time.

As corporate Australia falls in a screaming heap, WA’s blue chips have emerged with flying colours.

Perhaps there will be a little less talk of WA being a cowboy State from those over east.

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