The Tasmanian Residential Rental Property Owners Association is calling on the Government to expand the scope of their Land Tax review, beyond simply rates and thresholds. Our message is clear. Disincentivising rental ownership through multiple and excessive taxation brings significant risk, especially at a time when sale prices are at a premium, social housing stock is inadequate and competition for rental properties is fierce and prices are high.
Our Association agrees with the view that Premier Gutwein personally expressed as Shadow Treasurer in 2010 that Land Tax is“….an unfair tax that stifles investment and costs jobs”. We concur with the Premier's predecessor, Will Hodgman, from back in 2008 that Land Tax is unfair, inequitable and should be abolished. Unfortunately, other than passing years, massive valuation increases leading to skyrocketing bills, nothing has changed with Land Tax.
Our first preference is for the Government to deliver on the view that Land Tax should be abolished. Delivering on commitments and staying true to course is essential to building trust, which is now at an all-time low between the Government and rental owners. If the Government is unwilling to maintain their openly expressed position that Land Tax is unfair to the extent that it must be abolished, our Association believes the following actions will help make the annual tax fairer:
immediate action rates and thresholds - Tasmania's Land Tax is exorbitant
implementing different rates and brackets depending on whether the property is owned by an Australian citizen/permanent resident/company/trust or a foreign party, with the rates for Australian owned property being significantly lower than foreign owned land to support the local land ownership
allowing owners to own two properties (principle place of residency plus one other property) without being liable for Land Tax, recognising that the majority of rental owners own a single property as a strategy towards financial independence. For owners who hold two or more properties (in addition to the principle place of residence), owners could nominate which of the non-principle place of residency properties that they wish apply the exemption
removing the aggregation of property values as this penalises owners for holding multiple properties and dramatically rapidly inflates the tax payable with a single transaction. Removing aggregation will stimulate investment purchase at a time when each rental property is precious and sale prices remain out of reach for a large portion of the community
increasing the threshold so that Land Tax only becomes payable when the land value exceeds $420,000, which is the average of the thresholds in place for WA, NSW, Victoria, Qld and SA
significantly improving the transparency land valuations, the publication of Adjustment Factors and their financial correlation to Land Tax payable. For example, Notices of Valuation could be accompanied by a letter from the State Revenue Office that states what the valuation means in terms of the Land Tax payable.
overhauling the processes and timeframes between the Office of the Valuer General and the issuing of Land Tax bills so that the window to appeal a valuation has not closed by the time the owner received the Land Tax bill
implementing caps on land tax increases to minimise bill shock and enable budgeting to occur. For example, having a policy that bills will only increase by a maximum of 10 per cent per annum, regardless of the change in valuation
providing the penalty free option to pay Land Tax by direct debit over fortnightly installments across a 12 month period and
removing or significantly reducing the penalty interest rate which is currently excessively high at 8.10 per cent or switching it for a reasonable, low fixed rate penalty. A penalty in the region of the RBA cash rate plus 3 per cent would be much more reasonable, especially in the current economic climate.