Commenting on the story: Closing the land tax loophole makes perfect sense
The Australia Institute’s Noah Schultz-Byard article about land tax fairness is flawed. Flawed, because land tax is not a tax on profit, but a tax on wealth.
A wealthy property owner owning say $5m in land will have to pay $150,000 plus in land tax, then pay tax on the net income and on capital gains.
A wealthy person owning $5m in shares only pays tax on the dividend earned and is able to claim franking on the dividends, then pay tax on income and on capital gains.
A tax on profits is socially just. A tax on wealth is a disincentive to aspire. A tax on wealth is a disincentive to create more wealth which creates jobs and contributes to state and federal tax revenues.
At some point all government taxes and levies end up being paid for by the end user.
The shop owner or the residential tenant will eventually pay the price for these increases in land valuations, and hence land tax.
Why would a sane residential property owner invest in more residential property for a 2% return and a multitude of headaches?
The less worthwhile it is from a residential investor’s point of view, the less residential rentals will be available.
Then perhaps the Australia Institute will have some wise contribution how to increase the housing supply. – John W. Falzon
In your article you refer to multiple property owners “who make money from simply owning land and commercial investments” as being fortunate.
Well, if you call leaving school at 17 because of circumstances not in my control and working ridiculous hours for 47 years, taking extraordinary risks, sacrificing so much and surviving years on broken sleep as you try to make ends meet fortunate, then we must have a different understanding of what fortunate is.
Also the use of simply in the same sentence is offensive and derogatory, when you use it to imply that deriving an income from land and property is in some way a matter of simply just collecting the income, when so much has happened and is still happening in order for that income to be able to be collected.
Further in your article you write that the property lobby example actually shows how flawed the the current system is, when the rate of tax being paid is just .067 %percent on a non-aggregated combined property value of $1.56m.
The statistic you should have mentioned that would give your article some merit is that a new land tax based on an aggregation value of $1.56m would be $20431.00, then that rate of tax would be 34% of income; that is the statistic that matters, as that is how much of the combined market income (of $60k at a return of 3.8%) the three properties would be required to pay in tax.
Taxing an asset on its value without consideration for the market income of that asset is fundamentally a flawed process, as that asset cannot economically survive if it disproportionately channels its income to a tax.
After all the remaining state and federal taxes, repairs and maintenance and maybe some capital and interest payments, how can owning property in South Australia be a viable investment?
Noah Schultz-Byard, Mr Lucas and Premier Marshall, not everyone has the means or capability to build wealth to fund their retirement without accumulating property .
This new tax grab will destroy all we have believed possible and make a mockery of the sacrifices we made. Sad day indeed. – Constantine Kapiris
I am nearly 50 and have been building a self-funded superannuation portfolio for 30 years.
In my working life, I have never even reached the average wage level, so It’s taken a large and persistent effort.
I am a compassionate landlord and over the past 25 years the take home rent has not increased at all. Any rent rises have been swallowed up by government and insurance companies. The properties are in a state of decline and this is the reality of long term ownership.
I recognise the need to redistribute opportunity to those less fortunate but see far greater unfairness in the corporate and high income areas of society. Those earning $100k or more are doing ok despite the grumbling of entitlements earned from hard work.
Many of us work hard but the capitalist system in its current form is failing us. We need to rethink the values that our society sees as important.
One thing that is clear, is the widening gap between rich and poor. When one compares the difference between neighbours or work colleagues, the differences are not so significant, but when comparing differences between suburbs, the gap becomes obvious.
Similarly, looking at how society has changed over time provides a stark contrast. In the 1970’s a house cost 2.5 years of income, education was free, and ramping at hospitals was unheard of. Anyone could get a job. The corporate tax rate was 45 per cent and highest marginal rate 70 per cent.
There is often an argument that interest rates are lower now, but this is a false justification of housing affordability. If one could save a year of income it previously amounted to nearly half the value of a house – now this same amount is barely a deposit.
The validity of the interest rate comparisons is only true if one entered the market with no deposit and was prepared to only make the minimum repayments over 30 years.
Once a society becomes so unequal in opportunity, then it is very difficult to unwind without some form of crisis. Our governments do need to address this situation, especially considering the environmental crisis that will likely materialise later this century and compound our economic differences.
We need to focus on strengthening our societies in response to this looming problem, because we will be traveling this road together whether we like it or not.
The process of externalising asset ownership, debt, and the associated responsibilities, will likely act unfavourably towards solving these difficulties. – Phil Tindale
Commenting on the story: Labor cops spray over SA Water hikes
So the truth is revealed. Labor has been milking (SA Water) to prop up its mismanagement of the South Australian economy.
I predict a long period of austerity measures to rectify the situation.
I don’t think premier Marshall will be popular with the public.
But the repair work must begin, and not foisted upon the next generation. – Mike Lesiw
SA Water, thanks to the ALP’s dishonesty, over-charged all of their customers.
That tiny reduction in 2013 is insignificant when compared to the 150% increase over the previous 5 years, and there is no mention of the increases imposed between 2000-2008.
Typical dissembling politicians. Labor won’t admit it cheated the people of SA, Libs still want to blame Labor for everything.
Despite being deliberately overcharged, unlike people who don’t get paid their legal entitlements, SA Water’s customers will not get a back-dated refund and Lucas, just another typical dissembling politician, won’t reduce our water bills until after July 1st 2020 which means we are still being overcharged and this time it is the current State Liberal Government of SA which is rorting, cheating – call it what you will – the people of SA.
Roll on the next state election when we can elect decent, honest men and women who are actually trying to work for the benefit of the people rather than the current dogma-riddled, dishonest, two major parties. – Robert McCormick
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