"States reap property windfall"

Daniel Hoare and Greg Roberts, The Australian Newspaper, 9 March 2005

AN explosion in property values across the nation has provided state governments with a $3.5 billion land tax windfall.

In an attempt to force governments to abolish the tax, opposition leaders in three states have highlighted rises of up to 500 per cent on some properties.

Conservative leaders in Victoria, Queensland and South Australia claim the tax is crippling small businesses and forcing people to sell off their investment properties.

In Queensland, the land tax on a $500,000 property is $5,750, compared with $2,340 in Western Australia.

At a rally in Melbourne yesterday, Victorian Opposition Leader Robert Doyle called on the Bracks Government to curb its "addiction" to land tax revenue. A group of about 150 small business owners claimed many of them would be forced to sell up if the situation were not addressed.

Anni Baker, of Brisbane, rents out a one-bedroom apartment in inner-city New Farm and has increased the rent from $140 to $175 a week in two years due to rises in state government land taxes.

"The amounts people like me have to pay in land taxes to boost Peter Beattie's budget surplus are absolutely outrageous," Ms Baker said.

She said she tries to contain the rent increases for the eight apartments she owns so her pensioner tenants do not have to leave.

"This is supposed to be some kind of wealth tax but I am not wealthy," Ms Baker said. "I've got pensioners who've been here 20 years. They've got nowhere else to go."

She said the land tax for her apartment complex had risen from $854 in 1998 to $10,263 this year, and that it would go up to $12,808 next year. In that time, the value of her property had increased from $300,000 to $1.25 million, while the land tax-exempt portion had risen from $215,000 to $260,000.

Victoria will earn $917 million from land tax this year, compared with $768 million for the 2003-04 year.

The Real Estate Institute of Victoria has asked the Bracks Government to cut its top marginal land tax rate - which is paid on a sliding scale on properties worth more than $175,000 - from 5 per cent to 3 per cent in July next year rather than its promised staged reductions over the next three years. The institute has also asked that the marginal rate be dropped to less than 2 per cent by 2009 to bring Victoria into line with the rate in Queensland and NSW. Victorians escape land tax relatively lightly up until $500,000 but are slugged significantly higher above that threshold.

But Victorian Premier Steve Bracks offered little sympathy yesterday to small business operators who claimed land tax was putting them out of business.

"The reality is that small businesses - some are successful, some are not."

Jim Ryan, owner of the Whitehorse Inn will close his business this morning due to his land tax bill. It had ballooned from $1,400 in 1999 to $38,000 this year, he said.

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