Property tax hikes will hurt all Queenslanders
Nothing is certain except death and taxes. Thankfully, since the abolition of death duties in the 1970s, we no longer have to experience both at the same time. But governments still maintain a preference for taxing things that don’t move, and property remains an easy target for revenue raising.
This was confirmed in yesterday’s Queensland Government Mid-Year Fiscal and Economic Review which outlined the Government’s intention to increase the highest band of Land Tax by 25% and more than double the rate of its foreign investment tax.
These increases are being pitched as ‘Robin Hood’ taxes that will only affect the ‘big end of town.’ A more considered analysis of their flow-on impact exposes the tax increases as simply another cost that will have to be absorbed by everyday Queenslanders.
A vast majority of properties that will have to wear the Land Tax increase are commercial, retail, industrial and tourism properties. So Queensland businesses that operate on these properties – either as tenants or as owner occupiers - will ultimately end up paying the tax, either directly or through increased rents.
Beyond the spin, these taxes are just another increase to the cost of doing business in Queensland. An increase that will cost Queensland jobs and our state’s reputation as an investment destination.
Consider the tax increase’s effect on the production of XXXX. The Castlemaine Perkins brewery will face a 25% increase in Land Tax, as will the offsite warehouses which store its product. Many of the pubs, clubs and hotels that supply the product will also be subject to the tax hike. So who will pay the extra cost of production, distribution and supply of XXXX, and countless other Queensland products? Ultimately, it will be built into higher prices for all the businesses along the supply chain and for consumers.
This is not a tax on ‘big business’. It will come at a cost for every Queenslander.
Any competitive advantage that Queensland once held as a low-taxing state is very quickly disappearing. Land Tax rates for commercial properties in Brisbane are already 18% higher than in Melbourne, this proposed increase will only serve to make this gap worse.
While the Government had previously considered Queensland’s lower foreign investment tax rate as a point of pride, this is now being increased to align with other jurisdictions.
The true effects of these tax hikes will be felt over the long-term with potential investors turning away from job-creating projects in Queensland, seeking a more favourable tax environment and greater certainty about how their investments will be taxed in the future.
The Property Council’s analysis, based on the Government’s figures, reveals that the Land Tax increase would wipe between $1 billion and $1.25 billion off the value of commercial property values in Queensland. Many of these assets are owned by mum-and-dad Queenslanders through their superfunds. Queenslanders relying on strong growth in their superannuation investments will not appreciate being the target of a ‘Robin Hood’ tax.
With the Queensland property industry already paying 49.8% of all State and Local Government taxes, fees and charges, the Property Council is asking the Government to undertake a full review of the property tax framework in the new year prior to moving to implement these proposed increases.