ACT Treasurer, Katy Gallagher, has promised a mini Henry style review of tax – an excellent idea, especially for the property sector.
There is no doubt that property provides far more than its fair share of taxes in the ACT. 52 percent of the ACT Government’s taxation revenue comes from property.
And property taxes continue to spiral upwards, out of step with other taxes.
Over the 5 years to 2009-10, the ACT’s total revenue increased by an average of 6.6 percent per year.
Over the same five years the average annual increase in all property taxes was 13.3 percent, or twice the growth in total government revenue. And tax revenue from stamp duty on property transfers blew out by an average of 17.3 percent per year.
But unfairness and inequity isn't the only thing wrong with stamp duty and the other property taxes, such as the deeply unpopular and poorly designed Fire and Emergency Services levy.
Stamp duty, for example, is a volatile tax, making the whole government dependent for money on property sales. And, as we have just seen over the last few years, property is, in turn, affected by larger financial issues.
In recession, a government overly dependent on property taxes, for its revenue, suffers twice. It has to deal with the fall-out from the recession, and it has to do it with reducing revenue sources. Put simply, governments should never put all their eggs in one basket.
The ACT Government has relatively few ways to encourage growth in the economy. Changing tax settings is one of them. Lowering the rates of selected taxes would deliver economy wide benefits by helping to attract greater business activity.
The property sector is one of the key drivers of economic growth in Canberra, and it is important that government recognises that undue levels of tax discourages participation and reduces growth.
So this announcement is very genuinely welcomed. It gives a chance for independent assessment of our current taxation system, and provides government with the opportunity to create a taxation regime which is competitive, fair and well-targeted for our ongoing community wellbeing.
Have your say ...
Catherine Carter |
Thursday, 26 August 2010 1:14 PM |
2 Comments
