Tuesday 11 October 2005
QUESTIONS UPON NOTICE
LAND TAX - RENTAL PROPERTIES
Mr FINCH (Question) - Mr President, I have a question for the Leader. Firstly, is the Government aware of spectacular increases in land taxes on some multi-rental properties
because of the so?called adjustment factor which assesses multi-rental properties on an aggregate formula? For example, a constituent in my electorate of Rosevears is facing a 430 per cent increase in his land tax in two years. It has risen from $4 431 in 2003?04 to $19 112 in this financial year. Secondly, can the Government justify such a massive increase?
Mr AIRD - I thank the honourable member for his question. It is important for the honourable member to understand that there have been no increases whatsoever in land tax rates or changes in the way in which land tax is calculated. In fact, since 2002 the Government has implemented two cuts in land tax rates. In 2002 the Government implemented land tax cuts which provided savings to the Tasmanian community of over $2 million, each and every year. In this year's Budget the Government implemented further cuts in land tax which provided over $13 million in savings to the Tasmanian community.
The land tax cuts implemented this year have involved both an increase in the cut-off level for land tax payment and a reduction in the rates of land tax. As a result of the 2005-06 budget land tax cuts, all land tax bills issued this year will be lower than they would otherwise have been under the previous land taxes. The reductions which taxpayers will receive are quite significant. For example, a retired couple with property investments with a combined land value of $300 000 receive an annual saving of $2 430 or a reduction of 61 per cent compared with previous land tax rates. Alternatively, a business with land assets valued at $500 000 receives an annual benefit of $3 655 or a reduction of 43 per cent compared with previous land tax rates.
The Government, like the rest of the Tasmanian community, is clearly aware of the substantial increases in land values which have occurred in Tasmania in recent years. These increases in land values have significantly added to the wealth of many families and businesses in Tasmania. It is this increase in land values which has also been reflected in the calculation of land tax and in many cases resulting in increases in land tax liabilities; for example, the honourable member notes in his question an increase in the amount of land tax from $4 431 to $19 112. This increase in land tax liability reflects an increase in underlying land values from an estimated $320 000 to $1.1 million. It should also be noted that given the land tax amount mentioned by the honourable member, a taxpayer with this level of liability has received a benefit of $4 905 when the new land tax rates are compared with the previous year's rates.
The Government believes that the land tax cuts which it has provided are of significant benefit to the Tasmanian community. I note that Mr John Soundy of the Real Estate Institute of Tasmania has recently stated, and I quote him:
'most people I have spoken to have been reasonably pleased with the land tax demand they have got. In many cases they have been reduced and people are happy, but to the best of my knowledge the Institute certainly has not fielded a raft of calls in relation to complaints from people.'
The honourable member also mentions the aggregation principle which is applied to the calculation of land tax amounts. The aggregation of all of the land holdings of a taxpayer against which land tax rates are then applied is a longstanding approach which is also part of the calculation of land tax liabilities in all Australian jurisdictions which charge land tax. I understand that the aggregation principle is applied as a tax avoidance measure and to seek to ensure equity for the treatment of taxpayers.
The Government has a very strong record in relation to providing tax relief to the Tasmanian community. The value of tax cuts which have been provided to the Tasmanian community now exceeds $830 million over the period from 2002 to 2008 and 2009. This has taken Tasmania from the second-highest taxing State overall to the second-lowest taxing State or third-lowest jurisdiction when the Northern Territory is taken into account.
Land tax is a vital source of revenue for the Government which assists in funding our hospitals, schools, police and many other vital community services. Any suggestion therefore that the land tax cuts should be made over and above the significant cuts already provided by the Government must also take into account the need to fund a loss of revenue from other sources or alternatively the need to reduce expenditure.
In concluding, I would again emphasise there has been no increases in the land tax rates and the land tax cuts which the Government announced in the 2005-06 Budget will result in all land taxpayers paying less land tax than they otherwise would have paid under the previous land tax rates.