Amongst the mile of changes to our tax system recommended by the Henry Review, there’s one that many in the property industry have dismissed out of hand. Mr Henry and Co. proposed that land tax should be paid by all property owners.
It’s controversial because it’d be a massive increase on the current land taxes that only apply once you own a minimum value of property (unimproved or UCV – see your rates notice for yours). In Queensland it’s currently $350,000 for company-owned or $600,000 for individuals (approx 2 good Brisbane houses).
But maybe the critics have been too hasty – and hear us out here! Henry suggests a simultaneous scrapping of stamp duties on the transfer of property, arguing this tax leads to inefficient use of our housing stock. A typical inner Brisbane house purchase costs the buyer $22,000 in stamp duty ($15,000 if they’re owner-occupying) and this high cost penalises the changeover of housing. Empty-nesters for example are staying in the 4 bedder long after the kids have left home and the spare bedrooms aren’t been used.
An ABS survey suggests one in six Queenslanders have been in their home for longer than 20 years. They also found 14% of us move to get a bigger place, compared to less than 3% who downsize. Addressing the housing affordability issue, Henry says less hurdles to moving will encourage us to a smaller place. Why not swap the spare bedrooms for a more modern place with other features we want?
The States will rightly be nervous of scrapping stamp duties, with more than 40% of their income coming from property transactions. But a broad land tax would be more predictable and allow better govt budgeting. Of course as real estate agents we love the idea – we’d vote for a mandatory 5 years maximum in your home!
But what do you think? Would you prefer to pay land tax or stamp duty? Please post your comments.
Landtax is unfair, not the owner occupyer pays, but the invester, so THE RENTER.
Landtax should be paid as a extra Rates for the Government,
similar as we do for the council, companies and owners same price.
Stampduty could be paid by the sale, not by the purchase, but more reasonable
both land tax and stamp duty should be abolished. The GST was supposed to give the states enough funding. Land tax means that I will no longer invest in Queensland property and my next purchase has to be interstate or overseas otherwise I will breach the land tax limits . I am taxed enough already. This Land tax was originally established to stop people sitting on large amounts of undeveloped land without penalty and locking up potential development. The original limits were set quite high and were reasonable. however with inflation and soaring lasd prices this tax threshold is now so low that two investment houses will trigger land tax. – quite rediculous. The whole of the Henry review is crap. The mining tax will just kill off our major industry sector. Looks like we will all have to go and live elsewhere or be taxed out of existance.
I respectfully, but totally and comprehensively, disagree with the proposition that Land Tax should be levied on everyone – I don’t care what state taxes would be abolished in return. (Anyway, weren’t there a lot of State taxes and duties that were supposed to have been abolished when the GST came in? We’re still waiting!). Land Tax should never be allowed to be levied on all properties, regardless of value or whether or not the property is the principal place of residence. Never, ever! Let’s be clear. What you are talking about is a Wealth Tax. Once in place, what is to stop the Government (particularly one philosophically opposed to the whole concept of private property) setting the rate at a punitively high level? What about retirees, many of whom are already struggling along on Government handouts? We’re told the pension is going to be abolished anyway, when all the baby boomers start retiring. So how are retirees going to pay their annual land tax bill (along with rates and other taxes and charges), without taking out a reverse mortgage? Is that really what you want for everyone? The Henry Report also recommended that capital gains taxes be increased and negative gearing be curbed. Were they good ideas too? I certainly don’t. I’m afraid I agree with the Labor insider who described the Henry Report, while it was still under wraps and being considered by the Government, as ‘one thousand pages of bad ideas.’
Abolish State Governments – we only need two levels of government – this will save some money.
Abolish stamp duty – it’s an unfair tax that penalises those who are taking responsibility for their own housing by buying. Abolish it for investment property as well – it’s just a complication that requires more administration by the govt and compliance and cost for individuals and companies.
Don’t bother with land tax either – for principal place of residence or for investment property – again another complication that requires administration from the point of view of govt and compliance for businesses and individuals. If there isn’t enough money being generated by taxes raise the GST by 1 or 2% – whatever is required or perhaps apply different tax rates to property investments – this would be easier for govts to implement and administer and for individuals. Simply complete tax return as normal including property investments and then apply the govt’s chosen tax rate on property investments. The whole point of Henry was to SIMPLIFY the tax system, not complicate it further.