Taxes are ostensibly a good thing. It’s the source of money that pays for our roads, our children’s education, our healthcare, and any number of other services and support systems that we might take for granted.
In levying taxes though, governments be they local, state or federal, need to make sure that the system of collection is at least fair. I say fair rather than equitable, as not everyone will pay the same – as a rule of thumb if you earn more or have more, then you will generally pay more than those that have less. I am also going to steer around the effectiveness and efficiency of certain taxes, otherwise we would be five pages in on stamp duty alone, which is probably not the most entertaining topic.
One of the Queensland State government’s latest taxes however, is being held up to the light as perhaps lacking in the fairness department, as the calculations around land taxes sees a new, dramatic change.
If you only own your own home, and no other property, then land tax is unlikely to concern you, as your principal place of residence is exempt. But if you own multiple properties and they exceed a set total (unimproved land) value, then an annual tax is levied against that value, in each state in which you own property. As is appropriate for a State levied tax, New South Wales charges tax based on your New South Wales holdings, Victoria on your Victorian holdings and so on. This was also the case in Queensland, up until very recently however under the new land tax regime, your Queensland taxes won’t just be calculated on your property in Queensland, they will also assess you on your property elsewhere in Australia.
Presented as being designed to properly tax those owners that have been able to claim land tax free thresholds in multiple states (as those investors have every right to do), this essentially amounts to double dipping – you get taxed twice for the same property, for the same thing. Circling back to where taxes are a good thing and provide essential services, it’s hard to see how taxes paid in Queensland are benefiting your New South Wales properties.
Of particular concern is the comparative disadvantage this introduces for those that choose to invest in Queensland (as the only state to take this path) at a time when we need more housing investment than ever.
Tom Quaid is the REIQ Zone Chair for Cairns