LAND tax and other increasing property charges are shaping up to become one of the big-ticket items on the Western Australian Government election agenda in 2005.
The Real Estate Institute of WA, local property group Mair & Co, Housing Industry Association and the WA branch of the Property Council of Australia are leading the charge in the call for urgent property tax reform.
The State Opposition is following suit and will release a draft policy dealing with land tax within the week.
Opposition leader Colin Barnett said land tax had increased nearly 30 per cent since the Labor government came to power.
“We are proposing sensible changes, making land tax a more equitable, fairer system that supports property development and investment.”
Mr Barnett said he was looking to moderate assessments and would ultimately like to implement a flat land tax rate.
He said as well as business, some of the most affected were self-funded retirees who had invested in property to fund retirement plans.
“Many self-funded retirees have bought into investment properties and are having to divulge them now because of the increasing rate of land tax,” Mr Barnett said.
“This is not just a business issue but a retirement planning issue.”
Mr Barnett said the Liberal Party would also look at reinstating the exemption on owner-occupied family homes when owned by a private company and family trust.
Approximately 42 per cent of WA’s tax revenue will come from property taxes in the 2003-04 financial year.
By comparison, only 12 per cent of the State’s tax take came from property taxes in 1990.
REIWA president Jim Henneberry said the increased reliance on property taxes had exposed the Government to the cyclical and volatile nature of the property market.
He said that there was real concern that the property boom was masking the long-term problems that would be encountered when the property cycle quietened and property tax revenue decreased accordingly.
“Unfortunately there is a fear that the State Government will turn to even higher property taxes to make up lost revenue,” Mr Henneberry said.
He said property taxes were increasing at an alarming rate and that urgent and genuine reform of property tax was required to decrease the burden on home-buyers and property investors.
Mr Henneberry said an initial step would be to place a cap on the total revenue from land tax.
Between 1994 and 1999 the WA Government froze the total revenue from land tax by adjusting the relevant tax scales each year. According to REIWA figures, since a policy change in 2000, the total land tax revenue has jumped 22 per cent.
The Property Council has estimated that land tax increases cost WA businesses $43.2 million extra in the 2002-03 financial year, with the total land tax take totalling $278.5 million.
Mr Hennberry said that property tax reform needed to occur in a staged way and alternative revenue sources such as GST needed to be explored to plan for the future.
point in the middle of this decade GST revenue coming to WA will show a profit. There will be an excess of revenue from GST but it needs to be planned now,” he said.
Mr Henneberry said that property taxes were going to be a big political issue across Australia because all State Governments were facing this problem, however, it was a particular problem in WA because the State needed to attract more investment.
HIA executive director John Dastlik said the rate of property fees, taxes and charges in WA had increased by 18 per cent per annum over the past 10 years. By comparison the consumer price index increased an average 2.6 per cent per annum in the same period.
The property industry is also a cash cow for the Federal Government, which reaps a huge revenue pool each year from property industry taxes.
Mr Dastlik said in the 1998-99 period the Federal Government collected $140 million in taxes from the property industry. However with the introduction of GST in 2000 this figure leapt to $5.4 billion in 2002-03.
New home buyers delivered around $740 million in indirect taxes to the WA State and local governments in the same period.
“Property is an easy foil. There are only 18,000 to 19,000 houses built in WA alone per year, that is a small proportion of the voting public,” Mr Dastlik said.
He said HIA supported Mair & Co chairman John Mair’s Land Tax Revolt campaign, launched last week.
Mr Dastlik said that escalating property taxes would be an election issue.
“Housing and housing affordability will be on every election agenda, local, State and Federal,” he said.
Mr Mair said that to date he had received a significant amount of interest from the property industry with regard to the land tax revolt campaign.
The campaign is designed to make the increasing burden of land tax on the property sector a political issue at the next State election.
© Business News 2017. You may share content using the tools provided but do not copy and redistribute.