The sharp rise in land values in Western Australia in the past year has been tipped to produce a bigger than estimated increase in land tax collections.
The sharp rise in land values in Western Australia in the past year has been tipped to produce a bigger than estimated increase in land tax collections.
Property Council director Joe Lenzo said land tax collections this year were likely to be higher than the $342 million estimate in the state budget.
This followed the 23 per cent increase in land values in the September quarter, and the 77 per cent increase in the past year.
The outlook for land tax will become clearer later this month when treasurer Eric Ripper releases the mid-year financial projections.
The mid-year review is also expected to show that conveyance duty and payroll tax will increase faster than the government had estimated in the May budget.
The rapid growth in revenue was disclosed last week in the September quarter budget update.
Conveyance duty increased to $541 million in the September quarter, up 58 per cent on the same period of 2005, while payroll tax increased to $399 million, a rise of 20 per cent.
The September quarter report did not include land tax collections after the government delayed issuing land tax assessments.
Mr Ripper said the government wanted an opportunity to examine the impact of property value increases on the land tax scales, which were adjusted in the May budget.
“In the final analysis, the government decided that practical action was not feasible at this time and the issue should be addressed in…the state tax review,” he told parliament.
“It is very clear to me that the impact of rising property values on land tax will have to be considered by the government in the next budget process.”
The release of the September quarter budget update prompted WA’s five main property groups to join forces to demand tax relief.
The Real Estate Institute of WA, the Property Council, the Urban Development Institute of Australia, the Master Builders Association and the Housing Industry Association voiced strong concerns over skyrocketing stamp duty costs.
“Representatives of all the organisations have been actively involved in the state tax review for over a year but it’s becoming apparent that our collective warnings to the government about taxation blow-outs have been ignored,” REIWA President Rob Druitt told WA Business News.
UDIA director Marion Fulker believes the reliance on property taxes is not sustainable.
The final report of the state tax review is due to be completed next March and will be considered as part of next year’s budget.
Stamp duty reductions are expected to be the main focus of the review, ahead of land tax and payroll tax changes.
