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Tax slug hits builders

THE building industry may become the next victim of the State Government’s premium property tax.

Along with 900 residents and the real estate sector, those in the building industry suspect theirs could be the next to suffer from the new tax.

Grandwood Homes director Adam Zorzi reported his building company last week lost a $1.5 million contract after an overseas client decided against buying and building on a block in Minim Cove.

“Prospective purchasers have fallen over in the last few weeks when faced with paying this daunting tax,” Mr Zorzi said.

“We lost a client directly because of the tax, she will not build here.

“That was one month’s work for us plus work for several subcontractors … so when Mr Ripper says the tax doesn’t affect people outside the wealthy suburbs, he is wrong.”

Master Builders Association housing director Gavin Forster backed Mr Zorzi’s argument.

“This premium property tax will have an impact on our industry, it will deter people from upgrading and building homes in wealthier suburbs,” Mr Forster said.

“The tax has been watered down but it is the principle of the tax that the MBA is so opposed to.”

Treasurer Eric Ripper last week tightened the scope of the tax by promising the Government would legislate to restrict it to the top 0.22 per cent of landowners and index the $1 million threshold to the average rate of metropolitan residential property growth.

These changes follow an earlier decision to allow those who could not afford to pay the tax upfront to defer it until the property was transferred or sold.

Mr Ripper said that, based on these changes, the $1 million threshold would grow to $1.4 million in five years.

And in 20 years’ time, the 900 property owners affected would increase to 1189.

“The fact is, 99.78 per cent of WA property owners will not and will never pay this tax,” Mr Ripper said.

Mr Zorzi said while changes were still being announced and the introduction of the tax still not a certainty, many people had put property decisions on hold.

“People are stalling on making important decisions and it won’t take long before this indecision will also start to hurt the property sector,” he said.

However, Shellabears Real Estate principal Chris Shellabear said the sector had already felt the effects of the premium property tax.

“Just the mere perception of it has immediately affected the industry,” he said.

Mr Shellabear said the latest changes did not calm people’s fears because once the premium property tax was introduced it could be changed again.

“Payroll tax was introduced at the end of World War II to help with repatriation costs, but 56 years later we still have it. It now has very little to do with what it was introduced for, and the government is still playing around with it,” he said.

“These changes to the premium property tax do not give us faith that the threshold will be changed in future years.”

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