Property props up WA finances

The recent State budget confirmed the continued reliance of the State Government on the property industry for revenue.

Forward estimates in the budget revealed that property “taxes are estimated to account for around 39.7 per cent of total taxation in 2000-01”.

Unfortunately, the budget missed a golden opportunity to reform ineffective and inefficient indirect taxes.

The introduction of federal tax reforms presented an ideal time to reform indirect State taxes which retard WA’s growth.

The State Government has not delivered on reforms formulated under the original GST program.

The Government’s excessive reliance on property for taxation revenue needs to be scaled back.

Stamp duty and land taxes are two of the property taxes that impede business opportunities in this State.

The State Government’s stamp duty slug on top of the GST is bad policy and remained in this budget. It is a tax on a tax. It harms low income earners, small businesses and superannuation funds.

The budget papers state that higher stamp duties on property conveyances are expected to outweigh lower motor vehicle stamp duties, resulting in higher total revenues of $16 million per annum.

That is, property purchasers pay the price for the stamp duty slug.

Land taxes are also set to rise. The Government is forecasting a 22.5 per cent increase in land tax between 2000-01 and 2003-04.

This is in direct contrast to the scaling down of land taxes in other States. Queensland, for instance, has committed to abolishing land tax within eight years.

Existing land tax is inconsistently applied, which costs the community dearly.

The Property Council gave the State Government a pre-budget solutions statement in April which offered alternative approaches. We will be pressuring the Government and the Opposition to adopt those solutions in their election policy statements.

The State Government should consider the abolition or scaling back of stamp duties, which discriminate against property in favour of equities, and the broad based application of land tax.

l Joe Lenzo is Executive Director of the WA Division of the Property Council of Australia.