"Beach-shack battlers revolt on land tax, so Carr jumps"

Anne Davies, smh.com.au, 23 February 2005

Bob Carr has admitted to his backbench that the broadening of land tax to catch an extra 60,000 landowners is hurting Labor politically and will be reconsidered as part of the budget deliberations.

At the first caucus meeting of the parliamentary session yesterday, the Premier faced a deeply concerned party room, with several backbenchers telling him bluntly the expanded land tax was costing Labor votes.

Although the changes to land tax were announced last April, the reality is now hitting home.

Assessments for first-time taxpayers began arriving in late January, with most bills ranging from several hundred dollars to $1300.

The tax on second properties applies regardless of whether there is rental income. It is payable on the family beach shack or blocks of land, and it has to be paid within 90 days. Mr Carr told backbenchers: "Everything that you are saying about the politics of this is right," before assuring them that the tax would be reviewed in the context of the budget.

"His tone was very conciliatory," said one caucus member, "but the Premier also stressed that there were serious budget constraints on the Government with competing demands for spending on schools, hospitals and other programs."

The Treasurer, Andrew Refshauge, also spoke about the difficult environment faced by the Government in preparing this year's budget. The budget slipped into the red last year and this year a deficit of $118 million was forecast. A change to the accounting standard will mask the real state of the budget, with a surplus of $1 billion now likely to be reported.

The changes to land tax were announced in April last year and billed as a fairer system that would help small business.

Instead of targeting investment properties on land worth over $317,000 and million-dollar homes, the then treasurer, Michael Egan, announced it would apply to all second properties. The rates of tax were lowered at the top end, but the removal of the threshold has netted an additional 60,000 taxpayers, on top of the 139,000 people who were liable under the old system.

Some speakers at yesterday's caucus meeting criticised the fact that the changes had delivered tax breaks to the rich while slugging the less well off, who used investment properties as part of their retirement strategy.

The 2.25 per cent vendor tax so hated by the property industry was not mentioned. It affects far fewer people because it is payable only when a property is sold. It is not having the same political impact.

Asked later whether the land tax issue was hurting the Government, Mr Carr replied: "I am not going to brief you about what's in the budget; you will just have to wait till May. We will assess all of our revenue and spending options as we put that document together."

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