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Saturday July 31, 2010

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Land tax - more pain for the people of Victoria

Posted by: Tom Elliott for 3AW.com.au | 17 June, 2009 - 4:31 PM
State Governments love land taxes because property is one thing that can’t be moved out of their jurisdiction.

I remember working for a nationwide company in the early ‘90s when the Victorian debits tax was introduced, and all our pay came out of the Qld office to avoid this particular state based charge.

With respect to land, currently we have stamp duty when you buy a house, and land tax which is paid on annual basis on properties used for business or rental purposes.
Soon, however, we’ll have what planning minister justin madden is euphemistically calling the ‘Growth Areas Infrastructure Charge’ or GAIC.

This is a tax on people whose land is rezoned from agricultural to residential to propagate the continued spread of Melbourne’s outer suburbs.

The amount involved is a whopping $95,000 per hectare, which in many cases would wipe out any profit the land owner might make from selling.

And some cases the charge is so great that it makes the land impossible to sell at all. Irrespective of what the land is worth and how attractive it might actually be for redevelopment, the charge, or tax, is the same - $95,000 per hectare.

Now the state govt is claiming that the opposition should pass this tax as it’ll help pay for infrastructure in the newly developed outer suburbs into which farmland is being transformed.

But the question that must be asked is this – where will all these taxes on land end? When will the state govt realise that landowners are not a bottomless pit of revenue to be raided at will?

I worry about our state govt, because its spending and debt levels are spiralling out of control. The so called GAIC might well be dressed up as means of building new communities – but in reality it’s just a new tax designed to prop up the state budget. And I fear it won’t be the last.

Blog comments Your Say

  • As I live in the City of La Trobe, I feel that the tax is unfair. I own 10 Acres in a town which is considering an eastern extention of their bounderies. The adverage block goes for around $55,000 for 2000-2500 sqr mtrs. If I am rezoned as I have been told, to subdivide, I'll have a tax bill? Mr Madden, How is that possible? Rural Victoria cannot charge what Metro Melb does. Base it on price NOT SIZE.

    Ima Concerned Sunday 19 July, 2009 - 8:37 PM

  • Regarding the urban growth tax that land 0.41hectares will atract the TAX OF $95000 on land for developement.Myland is 10acres which had an easement running through the width as a flood drainagewould I still have to pay this tax if I sell as the easement reduces the land to below 4hectares

    June Dossett Thursday 9 July, 2009 - 1:38 PM

  • If you want to fight this grossly unfair proposal visit www.taxedout.com.au

    Therese Saturday 4 July, 2009 - 1:17 PM

  • There is nothing wrong with the Brumby Government, they are the best that we have ever had (even better than Bracks, and he did sod all). The Governments role is to get as much money as it can out of you taxpayers and doing as little as possible whilst doing so. Now if anyone out there can say that this is not true I'll eat my hat.

    mickp Tuesday 23 June, 2009 - 2:40 AM

  • ANOTHER BLATANT cash grab by a hopelessly incompetent government.
    This is the stuff of revolutions.

    JOhn william Monday 22 June, 2009 - 3:12 PM

  • Our tax system has usually been based on either a "user pays" system, or one where everone contributes to an outcome. This tax is different in that it requires a minority to pay for a service from which they themselves are unlikley to benefit. The tax also takes a huge proportion of the value of the land. The figures on which the GAIC is based are also questionable. The GAA refers to land being worth $15,000 per hectare before being brought into the growth zone - leading to the calculation of a "windfall" profit. Where do you buy land in Melbourne for $15,000 per hectare? Also why is it only rural people who get their profits taxed - why not the developers in Melbourne who make "windfall profits" on re-zoning or what about all those people who made "windfall" profits on shares? This tax is a disgrace!! The tax should be due only when the land is developed, that is, paid by the developer.

    Alison Monday 22 June, 2009 - 1:47 PM

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