Industry heads in Construction (Advertiser, 8 July), the Property Council and the developer lobby are issuing “dire warnings” mobilising against the changes to land tax announced in the state budget (Advertiser, 25 June). And why wouldn't they? In recent years business and vested interest mobilisations worked to defeat the many tax changes federally, and the bank tax in SA under the last government. The power of a well-funded scare campaign should not be underestimated, and some upper house MLC’s already seem to be succumbing.
The actual changes proposed in the budget are modest and a very reasonable response to a massive cut in state revenue caused by decreases in GST funds coming our way. And the land tax aggregation changes are offset by a decrease in the top rate of land tax.
It is important to recognise that here we are not talking about new taxes, or increasing tax levels. It is a simple change to close a rort and stop those with multiple properties from using trusts and other accounting structures to avoid paying tax on the total value of property-owned - the same tax that all other landowners pay.
The property lobby point to relatively high rates of land tax in South Australia, though I am not sure why that is relevant unless the claim is that it should be ok to avoid taxes if you think they are too high. But even so, even if tax rates are higher, the land values here are often lower, as might be the tax payable. And in any tax debate we always need to keep in mind that taxes pay for vital public and community services, and without them we would all be worse off.
So will the budget changes to land tax aggregation mean property owners will take their investment elsewhere? Well, not to NSW or Victoria because those states have long had the system we are moving towards (and it does not seem to have caused an end to investment there). Ultimately, if an investors' model is so completely reliant on avoiding taxes, are they really contributing to our common good? Clearly not as much as those who pay taxes owed without resorting to elaborate corporate tax avoidance strategies.
SACOSS is always happy to have a genuine debate about the appropriate rates and types of taxes, but the debate shouldn’t begin with a scare campaign and it must address how we raise the revenue needed to fund vital services – especially when the budget papers reveal a long term decline in state revenue. In this context, those MPs who are considering opposing the changes to land tax aggregation are contributing to the undermining of community services. Certainly the Legislative Council should do their due diligence to ensure there are no anomalies in the tax legislation, but ultimately we’d ask them to support these changes that bring us into line with other states, make the tax system fairer and our services more sustainable.
written by Ross Womersley, CEO
published in the Advertiser 10 July 2019