Speculation that a new land development tax is being considered in Western Australia should be dismissed immediately by the State Government, because it is jeopardising the State’s difficult task of resolving the housing affordability crisis.
Property Council of Australia (WA) Executive Director, Joe Lenzo said mandatory taxes to fund social infrastructure associated with land developments is lazy public policy and will indiscriminately increase the cost of home buying.
“A major reason for the housing affordability crisis is the increasing tendency for governments to use homebuyers as cash-cows for the funding of a range of community services that governments traditionally looked after themselves.
“Homebuyers pay stamp duty, GST in new housing, and the expanding taxes on land developers that are passed on directly to consumers. Our studies show that these costs average 25% of the new housing prices.
“In WA development levies are not mandatory and infrastructure contributions by developers are worked out with local governments on the merits of each project. At least this system is accountable.
“However a mandatory development tax will create a perfect storm at a time when housing has never been more expensive in WA. In other states increases in mandatory development taxes have far out-stripped construction costs, and have become cash-cows like stamp duty.
“The housing affordability crisis in WA will not be resolved any time soon if lazy public policy solutions like mandatory development taxes are introduced.
“If the Premier is serious about fixing the housing affordability crisis then his recently announced inquiry of land and housing markets in WA should undertake a full review of the far-reaching implications of mandatory development taxes.
“Property taxes account for almost half of all state taxes in WA. In addition local governments are already raising significant contributions from developers to fund social infrastructure. Surely the government can devise a smarter response to the affordability crisis than introducing a new tax”, said Mr Lenzo.
3 September 2007
For further information please contact:
Joe Lenzo, Executive Director, (08) 9426 1200 or 0419 044 768
Lino Iacomella, Manager Policy & Communications, (08) 9426 1204 or 0417 501 974