Victorian government attempts to hijack property boom with new taxes
Ahead of this week’s state budget, the Victorian government has flagged several new tax measures targeting property in...
Analysis of data from the Australian Bureau of Statistics by CoreLogic shows state and local governments collected $52.2 billion from property taxes during financial year 2016–17, the highest since 1999–00.
The rising figure, up 5.9 per cent from last financial year, make up 52.8 per cent of all tax revenue for state and local governments.
These taxes are made up of taxes on immovable property and taxes on financial and capital, according to the latest CoreLogic Property Pulse. Taxes on immovable property include land tax, municipal rates and other smaller taxes, while taxes on financial and capital transactions include mostly stamp duties as well as a few other smaller taxes.
The largest share of taxation revenue came from land taxes, municipal rates and stamp duty. Across all three, Victorians paid the most for municipal rates, while NSW paid the most in land taxes and stamp duty, as well as the highest amount in total.
Stamp duty in NSW is currently at 49.1 per cent of all property tax and 42.6 per cent in Victoria, which the Property Pulse stated is a volatile source of income for state governments due to the cyclical nature of the housing market. With that in mind, the Property Pulse suggested we could see stamp duty revenue fall over the next few years as we have passed the peak in both these states.
The Property Pulse mentioned that the high rate of tax being paid in these states “reflects the strength of these housing markets over the past decade relative to other states and territories”.
Over the last ten financial years, the data shows stamp duty revenue rose by 115 per cent in NSW, 114 per cent in Victoria, while land taxes in Victoria rose by 153 per cent, 123 per cent in Queensland and 125 per cent in Western Australia, and municipal rate revenue has seen a rise of 184 per cent in the ACT and 125 per cent in Western Australia.
Moving forward, the Property Pulse predicted that we could move away from stamp duty’s transactional tax to a tax on all physical property.
“Especially considering transaction volumes remain well below their peak and stamp duty revenue growth is largely being driven by higher values rather than a greater number of transactions,” the Property Pulse noted.
“Of course the transition to a broad based land tax will be difficult and recent owners may have to be compensated however, a more guaranteed source of revenue for state and territory governments means that they can much better plan for the future rather than being reliant on dwelling values and transactions remaining high in order to boost revenue.”