Liberal party members and supporters have already vented their anger about the changes, which would see the Government recoup around $40 million in revenue by changing the way land tax is levied on owners of multiple properties.
It will largely offset the budget impact of a broader move to reduce the rate and raise the threshold of land tax in SA, with a net reduction in receipts of around $10 million, increasing to around $18 million in coming years.
The aggregation measure has been bitterly opposed by several state Liberal MPs, however none has yet spoken out formally against the change.
But Liberal Party members on the city council have become the first to openly oppose the measure, with first-term councillor Arman Abrahimzadeh introducing a motion calling on Lord Mayor Sandy Verschoor to write to Premier Steven Marshall “to let him know how it’s hurting the city of Adelaide and our ratepayers”.
“We’re a capital city, and we have a lot of investment – and it’s going to hit that sector, the investment sector,” Abrahimzadeh told InDaily.
He said the perception being created amongst investors already was “enough to make you think twice about such a thing”, but warned it was “essentially going to drive the rent prices up” in the city, at a time when “we’re at an all-time high” in terms of vacancy rates.
“We’ll be asking the Lord Mayor to write to the Premier, asking him to reconsider this land tax because of the effect it will have on the City of Adelaide,” he said.
Abrahimzadeh is a Liberal member, along with fellow councillors – and members of the council’s dominant Team Adelaide faction – Houssam Abiad, Alexander Hyde and Franz Knoll, whose son Stephan is in the Marshall cabinet.
“It hasn’t been a good thing for the party and our supporters,” Abrahimzadeh said.
“From the Liberal Party’s perspective, if our core supporters are against it we might want to tread carefully on it.”
Abiad seconded that sentiment, saying ratepayers “have been inundating us with calls, in panic about what the potential impact of this would be”.
“We’re here first and foremost to represent our ratepayers,” he said.
Abiad said he was concerned the measure would create a triple-whammy in conjunction with the Valuer-General’s ongoing land revaluation and a foreign investors’ tax brought in by the former Labor government, that would discourage investment in the city.
I believe it is already causing irreversible reputational damage to our state
“The beauty of the Liberal Party is we can speak up and talk about things that matter,” he said.
“I believe governments should increase revenue by growing the economy, not by taxing it.”
In a Facebook post last night, he wrote: “As a Liberal, and understanding budget pressures on our state, I can not fathom why the investment sector has been targeted in such a drastic way.”
“I am very concerned about the impact this will have on all types of investors in our city… we need to lower the cost of doing business in our city, not increase it – I really do hope this measure will be reversed quickly, as I believe it is already causing irreversible reputational damage to our state.”
Knoll told InDaily he had not seen detail of either the proposed land tax measure or the motion before council, but would support further consideration of the issue.
Hyde, however, was firmly against the revenue grab, saying while he can “see what the Government’s trying to do with the reforms, ultimately the way it’s going to work I think will hit the city harder”.
Definitely it’s hit our base hard – the Government went to the election with a promise of lower taxes
He said while the broader land tax relief would be spread across the state, he fears a disproportionate amount of the $40 million recouped would come from city investments.
“I think the vast majority of that is going to come out of people that have property in the city, which means property owners in the city have less money to reinvest in other properties,” he said.
“It’s going to hit us hard – there will be less growth, and more run-down buildings in the city.”
Hyde agreed there was a strong backlash to the changes in Liberal heartland, saying: “The base is firmly opposed to it.”
“I think part of that is because the Government hasn’t done a very good job of prosecuting the argument as to what exactly the reforms will achieve,” he said, noting the intent was to promote “untapped investment and reinvestment potential”.
“But really that hasn’t been presented very well – people see it as a cash grab,” he said.
“Definitely it’s hit our base hard – the Government went to the election with a promise of lower taxes, and a lot of the stakeholders supported them on that basis… you can absolutely appreciate there are some pretty angry people, who backed us in election after election regardless of whether the state Liberals underperformed, which they did on occasion.”
Verschoor said while she would await the result of the council vote, she was personally “very concerned” by the land tax changes on top of a likely spike in land values as a result of the revaluation.
“They’re going to have a huge impact,” she said.
“I think the Government actually need to do a moratorium until they actually analyse what the increase is going to be… Land Tax aggregation is going to have an immense effect in terms of investment in the city.”
She said the revaluation would push up a “whole lot of other costs” that are based on property values including council rates, the Natural Resource Management Levy, the Essential Services Levy and water rates.
“I’m supportive of the motion and will be speaking to it,” she said.
I can’t pre-empt the decision of the chamber, but we’re all very concerned because it’s going to have a huge impact – not just on the city, but on SA.”
Marshall today told ABC radio “these things are always difficult when there is reform”.
“It is a particularly difficult thing when you’re talking about changing tax rates, there’s no doubt about it,” he said, adding that – “we’ve given a long lead time for this”, with the changes to be introduced to parliament in September and come into effect from next July.
“We’re still listening to people within the industry, hearing what they’ve got to say,” he said.
“They’ve put forward suggestions, that they believe that we’re going to bring in much more revenue than what we are projecting in our State Budget – we’ll take a good look at that.
“If there’s need for us to adjust those rates, well, that’s precisely what we’ll do.”
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