Budget gives with one hand and takes with the other
The State Government has delivered a Budget that gives with one hand and takes with the other – and here are five reasons why.
Treasurer Rob Lucas has ‘given’ the property sector the following initiatives and changes:
“The Government’s budgeted $12 billion in infrastructure spending will deliver hard hats and steel caps for South Australian construction workers, with more cranes to spring up across Adelaide’s skyline,” said SA Executive Director Daniel Gannon.
- Cities and housing
“Adelaide’s City Deal will transform South Australia’s economy, while aspiring homeowners and tradies will pick up their pom-poms and cheer the Treasurer’s housing stimulus measures.
- Budget surplus over the forward estimates
- Land tax rate reduction
“The progressive reduction of South Australia’s top land tax rate is strongly supported by the state’s biggest private sector employer and comes on top of last year’s sensible reforms to this punishing tax.
But at the same time, the Treasurer has ‘taken’ the following:
5. Land tax aggregation
“The budgeted changes to land tax aggregation provisions are a sharp sting in the tail for property owners and investors, and will deliver a tidal wave of taxation revenue.
“The State Government will reap an additional $120 million over three years in increased land tax revenue through aggregation changes. In simple terms, property owners and investors will pay more as a direct consequence of the state’s anti-competitive land tax regime.
“The historical reason why investors have been forced to create trusts is to neutralise aggregation, which contributes to making South Australia’s land tax regime the most anti-competitive in the country.
“If South Australia had flat land tax rates, we wouldn’t need to address this problem.
“Land tax rates have been a significant investor handbrake for many years, and in an effort to fix this situation the Government will actually punish the sector before helping it.
“By addressing this aggregation issue, the Government is further taxing the biggest contributors to state taxation revenue in South Australia, which presents some level of investor risk and will have flow-on implications for tenants and consumers.”
In South Australia, land tax is currently paid by only 22 per cent of taxable properties.
Of those, the top 2 per cent of ownerships by value account for 80 per cent of total land tax paid, while the top 10 per cent of ownerships by value account for more than 95 per cent of total land tax revenue (Deloitte Access Economics, 2017).
Media contact: Daniel Gannon | E [email protected]