More than $33 billion was added to local and state government coffers over the last year from property related taxes, despite a deterioration in property market conditions.
According to new research from RP Data, property related taxes amassed a healthy 47.3 per cent in tax revenue for state and local governments.
Total property-related tax revenue increased by 4.6 per cent over the year – following a record increase of 14.3 per cent over the 2009-10 financial year.
Despite this, the total value of residential property transactions in 2010-11 fell by 17 per cent compared with the previous financial year.
Over the financial year capital city home values fell by 1.4 per cent and transaction volumes for homes were 20 per cent lower than over the previous year.
RP Data’s Cameron Kusher said considering that since the end of the 2010-11 financial year property values and transaction volumes have continued to fall, he would expect that in order to grow tax revenue state and local governments may be looking to again increase land tax and municipal rates as there is likely to be limited (if any) growth in stamp duty revenue.
“Property tax is clearly the most important source of revenue for state and local governments and as a result it is likely that these governments will look to make adjustments to grow revenue. Most notably, we already know that rates have increased over the year and some changes have been made to land tax calculations.”
“Considering the soft market conditions over the financial year to date, we expect that state and local governments will begin to look for other ways to compensate the falls in property related taxes. Potentially this means higher rates of stamp duty or charging a greater amount of land tax / municipal rates,” Mr Kusher said.