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Business seeks state assurances on foreign buyers

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Treasurer Tom Koutsantonis has refused to rule “in or out” introducing a foreign buyers’ tax on property sales in next month’s state budget, despite the real estate industry demanding reassurance.

The impetus was set by the fledgling Andrews Labor Government in Victoria introducing a plan to slug overseas investors an extra 3 per cent stamp duty and a 0.5 per cent land tax surcharge on real estate purchases, to raise $330 million over the forward estimates.

Burgeoning interest in Australian property from foreign buyers has proved an irresistible lure for cash-strapped governments, with the Commonwealth also introducing a new application fee of at least $5000 from December, for an estimated windfall of $735 million to federal coffers over four years.

But the Real Estate Institute of SA is up in arms, with CEO Greg Troughton telling InDaily any disincentive to foreign investment is “the last thing South Australia needs”.

“We need to make sure we’re as competitive as ever, and we need to embrace any type of foreign investment,” he said.

He said he could understand such a move in Victoria, where overseas buyers constituted almost a third of the market, but it was an “absolutely ridiculous” proposition for SA.

“This State Government relies on property taxation too much as it is … You’re either open for business or you’re not,” he said.

He said instead of potentially emulating Victoria’s move, the state should “embrace” it, “because it makes us more competitive”.

“We should be saying, ‘Come west to the border and we’ll welcome you with open arms’.”

Koutsantonis said there was no indication he would introduce such a measure “just because something’s happened in Victoria”.

“In terms of any decision we’re going to make, I’m not pre-empting anything in our budget leading up to it,” he said.

“If I start ruling things in or out, the moment I say ‘yes’ or ‘no’ to a foreign investor tax, people will say ‘what about abolishing stamp duty?’ or ‘what about payroll tax?’”

“The Real Estate Institute should speak to Joe Hockey (about his application fee), rather than criticise a Government that hasn’t done anything at all.”

REISA told InDaily it had requested an urgent meeting with the Treasurer to seek reassurance, but Koutsantonis said: “That’s news to me.”

But Troughton warned continued uncertainty sent a poor signal, saying: “Even the mere speculation of a foreign tax is a retrograde step.”

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