Uncompetitive tax rates in the ACT are impeding growth and stand as a significant barrier to investment in the Territory according to the Property Council of Australia
Property Council ACT Executive Director, Catherine Carter, said:
“The ACT Government has relatively few ways to encourage growth in the economy, however changing the tax settings is one of them. Canberra’s current tax regime is not only uncompetitive, but acts as an impediment to achieving the ACT Government’s policy objectives of diversifying the economy and attracting business to
Canberra, as outlined in its Economic White Paper released in late 2003.
“Lowering the rates of selected taxes would deliver economy wide benefits by helping attract greater business activity.
“The ACT has Australia’s highest rates of stamp duty on property transfers. At 6.75 per cent this is a full 1.17 per cent higher than the next highest jurisdiction. This places the ACT at a clear competitive disadvantage, particularly in respect to investment in commercial property.
“Investing in a $40 million commercial office building, for example, will cost $500,000 more in the ACT than in Victoria or NSW. This is a significant sum of money to any potential investor who is seeking value for money for their investment, and can invest their money anywhere in Australia.
“There are a range of other taxes which should be reviewed, and in some cases abolished. The Fire and Emergency Services Levy is one such tax which is poorly targeted, regressive and highly inefficient.
“More generally, the ACT Government should acknowledge the sheer amount of tax it reaps from the property sector. More than 52 per cent of all tax revenue in the ACT comes from property and, for the first time, stamp duty on conveyances has become the largest single source of revenue to the ACT Government, outstripping payroll tax.
“Stamp duty, in particular, is a very volatile tax and so does not provide a good foundation to rely on for fiscal policy. Put simply, the Government shouldn’t put all its eggs in one basket.
“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 mitigates against activity and reduces growth.
“The experience of the NSW Government and the ill fated Vendor Duty is a stark reminder of what can happen to a market as a result of bad taxation policy.
“Canberra’s tax regime should be the subject of a thorough review to ensure it is competitive, fair and well targeted. This should be done on a regular basis and be the subject of public scrutiny,” Ms Carter said.
For further information contact:
Catherine Carter, Executive Director, 02 6248 6902 or 0412 330 079