"Land tax outcry prompts check on valuations"

Anne Davies, State Political Editor, Sydney Morning Herald 26 February 2005

The state's Valuer-General is being investigated over the way he arrives at valuations used to calculate land tax, amid an outcry over recent valuations that have resulted in some landowners having their bills doubled, despite a falling real estate market.

The state's assistant Ombudsman, Greg Andrews, confirmed yesterday that the Ombudsman's office was investigating the methodology used by the Valuer-General to calculate the unimproved land value.

The Herald understands the inquiry follows numerous complaints of discrepancies arising from the 2003 assessments. But the inquiry has now been extended to 2004, and a report is expected in a few months.

The State Government is already copping a political beating over its decision to broaden the land tax base to include all NSW property apart from peoples' homes. As a result, the number of those paying land tax is expected to rise from 139,000 to closer to 500,000.

The exact number is still unknown because the Government is assessing the vast bulk of people who may be liable.

While the broader land tax has angered those paying it for the first time, other taxpayers are aghast at the valuations they are receiving, which are then used to calculate their liability.

"I think one of the problems is that people are receiving bills for the first time, and the last valuation they received was three years ago, in relation to their rates," Mr Andrews said.

Land tax is calculated using valuations done every year, while valuations for rates are done every three years.

But David Singer, a land-tax campaigner and lawyer at David Landa Stewart, said the problems were far more deep-seated.

The Valuer-General had ignored all property commentators and increased 2004 land values throughout NSW, he said.

The process of valuing land is extremely complicated in built-up suburbs where there are few vacant land sales. The Valuer-General strikes a value for a group of about 200 homes and then looks at recent sales to develop an indexing factor for each year. He is meant to take into account local market factors, improvements on the properties, and any special characteristics, like a waterfront, when calculating the index factor.

Documents obtained by Mr Singer under freedom of information laws reveal that in the case of Waverley, the Valuer-General's consultant recommended increases of 5 to 20 per cent, even though one property studied in detail by the consultant had shed 13 per cent of its land value.

The report notes the recommended increases "may prove contentious given that properties are currently taking longer to sell ... Prices of improved properties have also fallen since November 2003 and there have been fewer speculators in the marketplace".

The report goes on to say the reason why there are increases for Waverley is "in part due to compliance with the statistical measures required in the [Valuer General's] procedures manual."

The vagaries of land tax were demonstrated again this week in the Land and Environment Court.

Anthony Maurici has been from the court to the High Court and back again to fight the 1997 assessment of his Hunters Hill waterfront property.

The valuations have varied from as much as $1.95 million, the original determination by the Land and Environment Court, to $3 million, the latest claim by the Valuer-General's representatives.

This week Mr Maurici was victorious when the court, rehearing the matter, lopped another $100,000 off the valuation.

NSW now has one of the toughest land-tax regimes in the country.

No land tax is payable in Victoria on land valued at less than $174,999. In Western Australia there is a $100,000 threshold and low rates of tax up to $200,000. In South Australia there is a threshold of $50,000 and in Tasmania one of $15,000. Queensland has a $220,000 threshold for residents who own an investment property.

Further Information

For further information contact:

• Simon Singer
• David Singer