Premier Steven Marshall returned from annual leave this week to a political storm ignited by the $40 million annual revenue measure, which seeks to remove incentives for landowners to hold property in different ownerships to minimise their land tax liability.
Marshall saw off dissenters at a party-room meeting late yesterday, asking for more time to consult with affected businesses, individuals and lobby groups.
That includes seeking detailed modelling of the financial and economic impact of the changes from the Property Council, which has spearheaded a high-profile public campaign against the changes.
Marshall denied his Government had done no modelling of its own before announcing the measure on budget day, saying “modelling has been done for Treasury to provide the estimates that have gone into the budget”.
“But different sectors say they’ve got separate modelling [so] if people from different sectors have got something which will improve the modelling we’ve got in the state budget, we’re happy to listen to them,” he told reporters today.
He’d earlier told reporters that “the Property Council are getting some modelling done, so we’re waiting for that at the moment”, but concedes not everybody will be better off under his Government’s land tax reforms.
“All reform has people that are winners and losers – we’re trying to minimise those people that are adversely affected,” he said.
“What we want is lower land tax, and that’s what we’re working towards… there will be some people who will be adversely affected, but overall there will be far more beneficiaries of the system we’re providing.”
But Property Council executive director Daniel Gannon, a former adviser to Marshall and Treasurer Rob Lucas, today gave the Premier’s olive branch short shrift.
“The Property Council chose to initiate independent modelling advice only after the State Government released its Budget last month,” he told InDaily.
“If the State Government was acting responsibly, it would have done its homework before pulling the trigger on this destructive tax.”
Gannon, who met with Marshall yesterday, said the lobby group’s modelling showed “that a ‘mum and dad’ investor who owns three average priced properties will see their land tax bill increase from $1100 this year to more than $20,000 next year”.
“That’s destructive and it’s a tax on aspiration, not to mention a backflip on the Premier’s promise of lower taxes,” he said.
Marshall, however, insists the current land tax regime contains a potential “indefensible” loophole.
Asked if he agreed it was a rort, he said: “I genuinely think we do need to deal with the aggregation issue.”
“It just is indefensible from my perspective to have, say, someone who might have $7 million worth of property in a single property paying a completely different rate as someone who may have $7 million in multiple land holdings.”
Asked by InDaily whether the Government had done its own modelling of the planned changes, Treasurer Rob Lucas said: “Treasury have done estimates, if you want to call that modelling… they have to do their best estimates of looking at what the impact of the provision will be.”
Lucas says overall property owners will pay less land tax under the Government’s full suite of changes, with the $40 million recouped annually from the aggregation changes offset by increasing to the tax-free threshold to properties valued at $450,000 and reducing the marginal tax rate.
The net gain would be $9.9 million, rising to $18.4 million by 2023.
“The Property Council is getting modelling done… if it does modelling and we accept the valuation of the modelling is higher than $40 million a year, then we’ll have the capacity to more quickly reduce the top rate,” he said.
But he maintained the intent to reap the $40 million a year under aggregation changes.
Interestingly, reforming aggregation to adopt arrangements similar to New South Wales, Victoria or Queensland was one of the options canvassed in a tax reform discussion paper released by the former Labor government in 2015 – and not adopted.
At the time, the budget boost was estimated “in the order of $30 million per annum”.
Labor had already changed the Land Tax Act in 2008, introducing “a land tax anti-avoidance measure to counter the practice of jointly holding land with small interests in order to avoid aggregation provisions”.
Shadow Treasurer Stephen Mullighan told InDaily: “During the previous term, Treasury put forward Land Tax aggregation measures similar to those in the Marshall Liberal Government’s Budget, and they were not adopted.”
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