HEADS OR TAILS
The Real Estate Institute of South Australia (REISA) believes that land tax stifles investment, discourages
prudent retirement planning and throws a costly spanner into the cycle of home ownership.
Land tax is the other side of the property taxation coin. On one side there is stamp duty impacting buyers
and on the other is land tax impacting owners.
Two things happen when the coin is tossed. And it doesn’t matter on which side it lands. First, the State
Government receives massive revenues. And secondly, the property industry suffers another debilitating
blow.
President of REISA, Mr Ted Piteo, said ”Stamp duty seems to occupy much of the conversation about
property taxation but land tax is also an important part of the debate”.
“Last year alone, land tax swelled Government coffers to the tune of $576 million or 14% of State
generated revenue. In fact, South Australia has by far the highest reliance on land tax as a source of
revenue in Australia.”
“In addition, we have the most uncompetitive regime in the nation with the lowest maximum threshold of
$1 million at the highest rate of 3.7%. While many people may be quick to point out that land tax is
justified for anyone holding investment properties to this amount, this is missing the point.
“As prices rise and bracket creep inevitably takes place, coupled with the introduction of the aggregation
principle, this threshold is much more easily reached than ever before.
“When you also take into account that land tax is based purely on the value of the property and not on
any level of net income which that property may generate, you have a situation where land tax is unfairly
penalising members of the community who are simply trying to invest and save for their retirement and
future” said Mr Piteo.
If land tax remains at the punitive level it is now, then South Australia will continue to fall behind its
interstate counterparts. Investment will stall, housing affordability (particularly for renters) will be a
pipedream and property will cease to be a viable option in retirement planning.
“As we approach a State election, both political parties must start listening to industry and homeowners
and start entering into a constructive dialogue on how best to manage the important question of property
taxation” said Mr Piteo.