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Stamp duty ‘knee-jerk’ reaction from government

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Australian Broker | 13 Dec 2013, 06:00 AM Agree 0
Property taxes are a “knee-jerk” reaction from government which serve to put the brakes on the property market while filling government coffers, says a real estate industry leader.
  • Karl Fitzgerald | 13 Dec 2013, 10:47 AM Agree 0
    re "Land tax is a heinous tax, the biggest disincentive to property investment imaginable."

    Last time i looked, no matter how much 'investment' is made in property, it can't increase the supply of land. There is no other industry on earth where you can buy land and wait, earning thousands in your sleep, whilst others do all the work for you, improving the local community, building better infrastructure.

    Land Tax recycles a pittance of the natural increase in residential land values we saw in 11-12 of $191bn. This increase was $37bn higher than the year before.

    And yet these same people cry poor over lack of infrastructure. Many in the property lobby understand that such value capture is the best way toward financing a fairer society.

    John Cunningham should read the Henry Tax Review to understand why Land Tax is the most efficient tax. John is advocating higher taxes on my productive work whilst he gets to buy and sell paying very little. Hopefully Cunningham will agree in time that a flatter, fairer Land Tax should be established to replace developer levies, so that costs are spread over the lifetime of the asset, not hitting just one generation.
  • Beneath the surface | 13 Dec 2013, 11:04 AM Agree 0
    Can always count on the REI to play the same dodgy tune:

    * Booming real estate industry - but blame the gov't, blame the taxes!

    (Most wealth in Australia has been made in property DESPITE the taxes)

    * "commission research into different options for minimising stamp duties". Christalive, at least they're declaring the planned outcome of their 'research'

    * filling state gov't coffers? Hint: no state gov't coffer is anywhere near full.

    Few people want a higher GST just so property flippers can pay less stamp duty.
  • Beneath the surface | 13 Dec 2013, 12:16 PM Agree 0
    Can always count on the REI to play the same dodgy tune:

    * Booming real estate industry - but blame the gov't, blame the taxes!

    (Most wealth in Australia has been made in property DESPITE the taxes)

    * "commission research into different options for minimising stamp duties". Christalive, at least they're declaring the planned outcome of their 'research'

    * filling state gov't coffers? Hint: no state gov't coffer is anywhere near full.

    Few people want a higher GST just so property flippers can pay less stamp duty.
  • David Spain | 13 Dec 2013, 01:23 PM Agree 0
    Actually, all land (including natural resources) is on loan from the Creator. See Lev.25:23. It shall not be traded forever. Those who purport to own it and peddle it are thieves & fences. The full annual rental-value of every site privately occupied must be paid to the community as the sole source of its revenue, if ever we are to have economic & political stability. All taxes on effort & transactions must be ditched.
  • Gavin R. Putland | 13 Dec 2013, 01:52 PM Agree 0
    "Land tax is a heinous tax, the biggest disincentive to property investment imaginable," says Cunningham.

    In fact, land tax is the biggest STIMULUS to property investment imaginable. The land can't run away, and someone must own it, and whoever owns it must generate income from it (or sell it to someone who will) in order to cover the tax. So the owner must develop the land to make it usable (e.g. by INVESTING in accommodation) and then either use it or let it.

    By the way, stamp duty is mostly avoidable. If you're a home owner, you don't need to pay stamp duty just because you need to move. You can let your old address to tenants and rent your new address, and thereby avoid a dutiable transaction.
  • Alex Fletcher | 13 Dec 2013, 02:59 PM Agree 0
    John Cunningham needs to consider what land price is. He appears to have made a common knee-jerk reaction that all taxes are bad.

    Land tax is simply a counterweight to mortgage debt.

    If two parcels of land are offered for sale and one has a land tax liability attached to it, the rational buyer will pay less for that location. This infers less mortgage debt for the buyer and less profit for the developer and banks. Such a tax replaces decades of bank interest payments with a lower land tax paid annually to the government, with such revenue allowing reduction of taxes on work and saving such as income tax or GST with benefits to the individual and the economy.

    Land price is simply the private capitalisation of a parcel of land's rent, net of charges such as rates and land tax. Higher rates and land tax mean less privatised rent to be capitalised into land prices which means LOWER land prices. Basically you pay this anyway, either as a lump sum in your mortgage with bank interest or annually as a lower land tax.

    Reduction or abolition of stamp duty without an in tandem application of an annual land tax would merely be capitalised into higher land prices.

    Those who own the bulk of debt free property and the banks through the stream of interest payments on the massive housing debt are the beneficiaries of the absence of land tax.

    A multitude of economists from Adam Smith on have endorsed land tax as a beneficial tax. Here is a link to a recent article by economist Professor Michael Hudson on the global economic results of our tax system which taxes work and saving and neglects land tax.

    http://www.truthdig.com/arts_culture/item/productivity_compound_interest_and_poverty_20130209
  • Leo Foley | 13 Dec 2013, 10:23 PM Agree 0
    Heh; heh; heh! Well, at least I assume Cunningham is pulling my leg. Good one, John!
    If we want to make property affordable for first home buyers, then obviously a tax on the value of land will keep prices lower. Tax benefits for investors and grants to buyers just push the price up. Oh, here we go again!!
    'Heinous', indeed. Wipe it on your sleeve, John. Gezundheit.
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