Treasurer Rob Lucas today said the State Government rejected a Property Council proposal to impose an average new land tax bill of $1,595 on 213,000 landowners who currently don’t pay any land tax at all.
This crazy proposal is included in the Property Council’s submission to the Government over proposed land tax reform proposals and is consistent with the Property Council’s policy position it advocated four years ago at the State Tax Reform Summit.
The Property Council believes that the land tax base should be broadened by ensuring many more ‘mum and dad’ landowners have to pay land tax whilst reducing the amount of land tax their Property Council members would have to pay. This radical policy position is also being publicly promoted by a number of opponents of the Government’s land tax reform package.
The fact that the Property Council believe that the impact of a new $1,595 land tax bill for at least 213,000 ‘Mum and Dad’ investors would be ‘small’ shows how out of touch the Property Council and its supporters are on land tax reform.
Whilst an annual bill of $1,595 bill might be ‘small’ for Property Council members it would smash the household budgets of very many struggling SA households.
The Property Council submission on page 14 argues:
“For the 213,000 landowners currently within the tax free threshold, adopting a flat rate of land tax would impose an additional tax burden. While the base of a flat tax would be far broader, the impact on each individual landowner would likely be small in absolute terms. For example, the median home owner outside of metropolitan Adelaide with a property valued at $275,000 would pay $1,595 in land tax every year.”
The Property Council then argues that its members would be massively assisted because a commercial property owner (site value $1.75 million) would only pay $10,150 instead of $29,820.
This proposal would mean a Property Council member with a big commercial property valued at $50 million would save about a massive $1,400,000 each year!
Most of the impacted 213,000 ‘mum and dad’ investors would only own one or possibly two investment properties to be under the tax free threshold. However, if they own two investment properties the extra ‘Property Council’ land tax bill would actually be $3,190.
Whilst the new ‘Property Council’ land tax bill would be $1,595 for a $275,000 property it would be about $2,000 for a $400,000 property.
The real intentions of the Property Council and its supporters have now been starkly revealed by their submission. Whilst they have every right to advocate on behalf of their members and self interest, their claim to represent ‘Mum and Dad’ investors was always a nonsense and a cover for their real plans.
The dangers of allowing the Property Council and its supporters to dictate the debate on land tax reform are now clear to everyone.
The State Government on behalf of more than 200,000 ‘Mum and Dad’ investors will not support this radical proposal for a new ‘Property Council’ land tax on struggling SA families.