The South Australian government has released a discussion paper which outlines possible reforms to the state’s taxation system. Of particular note, is the proposal to replace conveyance duty (primarily stamp duty) with a broad-based land tax. The discussion paper points out that conveyance duty is “generally considered to be one of the least efficient taxes levied by the State. Although it provides a significant source of state revenue (around 22% of total tax revenue), it is also highly volatile with annual growth ranging from negative 20% to positive 42%.
Conveyance duty is seen to be inefficient due to its significant impact on property transactions. In many cases it can be a disincentive for businesses who are considering purchasing property, whether it be to expand or restructure their operations.
The introduction of a broad-based land tax would mean “all owners of property pay an annual tax, not just when they purchase”, with a median value home to attract a tax of around $1,200 per year.
We certainly welcome any proposals that facilitate growth conditions for South Australia’s Real Estate & Construction sector and commend the South Australian Government’s report for thinking progressively in relation to addressing inefficient state taxes.
Any proposal for the abolition of stamp duty should be good news for residential builders, so long as other supply constraints, such as development restrictions are also reduced. Cheaper transaction costs without a reduction in red tape would only provide limited benefits.
Premier Jay Weatherill said the State Tax Review Discussion Paper will encourage business, industry and advocacy groups, and individuals to put forward ideas that are competitive, sustainable and fair.
Submissions close Friday, 10 April 2015.
National ABS Building Approval numbers for new dwellings showed 2014 was a strong year, surpassing the 200,000 mark for the first time in a calendar year. South Australian Executive Director of the Property Council of Australia, Daniel Gannon, said “the record national numbers have been supported by domestic and foreign investment, however, South Australia is missing in action”.
In trend terms, dwelling approvals in South Australia rose by 0.2% in December. However, this is significantly less than approvals in Tasmania (4.8%), New South Wales (3.2%), Western Australia (0.9%), Queensland (0.8 %) and Victoria (0.6%). It appears that South Australia is not benefiting from the same levels of both domestic and foreign investment as the other states. However, Daniel Gannon says “The Property Council is firmly focused on working with the South Australian Government to achieve planning reform which integrates the infrastructure Adelaide needs to drive investment”.
