"Landing $400m tax load"

Mark Skelsey, The Daily Telegraph, 13 April 2005

THE State Government could reap as much as $400 million from first-time land tax payers, in a revenue grab which has been linked to $30-a-week rent rises.

Treasurer Andrew Refshauge has revealed that the land tax burden is likely to have dramatically shifted to first-time taxpayers.

The fresh revenue information came as the NSW Real Estate Institute yesterday said rental vacancy rates were at their lowest level in five years, forcing up rents.

The Daily Telegraph has obtained a transcript of a radio interview conducted with Mr Refshauge two weeks ago in which he admits the potential impact on new land tax payers.

Mr Refshauge was commenting on Opposition Leader John Brogden's proposal to place a moratorium on collection of land tax from first-time payers.

"If you have a moratorium you'd have to say everybody that is new in the land tax scheme this year would have to get all their money back," Mr Refshauge said.

"That would probably cost in the order of $400 millon, maybe a bit less."

Yesterday, Mr Refshauge's office said the $400 million was only a "rough estimate" and in fact could be as low as $200 million.

A spokesman for Mr Refshauge said final registrations and exemptions had yet to be completed so any estimate would be inaccurate.

The State Government has removed the $317,000 land-tax free threshold, meaning hundreds of thousands of small-time property investors will pay tax for the first time.

Land tax activist and lawyer David Singer said Mr Refshauge's revelation meant as much as $2 billion in total could be collected this year, up $550 million on Budget estimates.

A new Real Estate Institute report has revealed that Sydney rental vacancy rates have nearly halved, from 3.8 per cent in July 2004 to 2.2 per cent in March 2005.

During this period, vacancy rates have remained stable in the Hunter region and dropped from 4 per cent to 3.4 per cent in the Illawarra region.

REI president Rowen Kelly said anecdotal evidence indicated Sydney rents had jumped 5 to 10 per cent in the past six weeks, due to the rental squeeze.

Considering the median inner Sydney rent was $340 a week before this time, this means rents may have risen by more than $30 a week.

Mr Kelly said rental inspections were now regularly attracting 10 people, compared to only two or three a year ago.

He said the low vacancy levels were happening because property investors had fled the market or were trying to pass on land tax increases, while unit building activity had slowed.

A spokesman for Mr Refshauge disputed land tax had caused the REI's claimed rental increases, saying any increases were linked to market supply and demand trends. The latest Government rental report had shown NSW rents had risen $10 in the year to December, the spokesman said.

Further Information

For further information contact:

• Simon Singer
• David Singer