The revenue raising potential of a broad-based land tax

There has been a significant amount of commentary in recent years on the relative efficiency of the various Federal and State tax arrangements. The work around Australia’s Future Tax System, followed more recently by the Tax White Paper process, and various state tax reform initiatives in the interim, has led to a series of relatively consistent findings on the efficiencies and recommendations for reform. One reform option frequently canvassed is the reform of state property taxes, with land taxes replacing the lost revenue from an abolition of stamp duties.

What has been largely absent from the debate so far is analysis of the practicalities of such a reform. In particular, what land tax rates would a revenue neutral abolition of stamp duties imply, and would these be pragmatic given the likely political cost of expanding the land tax base to include owner-occupier homes and other currently exempt land-holdings?

This report seeks to address these questions. By moving the debate beyond estimates of the relative efficiency of different taxes, of which there is no longer much debate, and shedding light on what property tax reform options imply in practice, this work provides decision makers with a more concrete overview of the options.

Download the report below.