Land tax is needed but won’t happen

By Leith van Onselen

The Australian’s Adam Creighton has written a ripper post explaining why, in the wake of tax avoidance scandals (e.g. multinational and the Panama Papers), a broad-based land tax is needed more than ever, but will never see the light of day due to vested interests and weak politicians:

Windfall gains to private land owners stemming from developments outside their control are a far better object for taxation than income and consumption, which prop up vast avoidance industries…

Taxes on land are unique economically because they can’t be avoided and they don’t distort supply…

In fact, over time land tax (which should apply only to the unimproved part) could even ­reduce rents by encouraging development, including more apartments, on undeveloped land…

Land taxes may well be fairer, too. Just as the owners of land adjacent to new railway stations have done nothing to generate their windfall, land owners don’t lift a finger to generate increases in unimproved land values…

A comprehensive national, flat rate tax on unimproved land taxes was part of Labor’s platform from 1891 to 1905. The party should consider resurrecting this policy and using the proceeds entirely to slash personal income and/or company tax to unleash a productivity, investment and spending boom. This would help affordability; property prices would automatically fall…

A 1 per cent annual land tax without any exemptions could raise around $44bn based on the ABS’s estimates…

The economic ignorance and self-interest of land owners will, however, prevent any shift towards land tax, however beneficial it might be in the long run for almost everyone.

Vested interests would launch a hysterical defence of existing arrangements, wrongly claiming poor renters would be harmed.

Others would argue even stupid policies can’t be changed because some people have arranged their affairs around them.

Creighton has nailed it.

Land taxes are one of the most efficient sources of tax available, actually creating positive welfare gains to the domestic population of $0.10 for each dollar raised, since non-resident home owners are also taxed (see below Treasury chart).

ScreenHunter_6774 Mar. 30 10.24

Even just switching inefficient stamp duties (which cost the economy $0.70 per dollar raised) to a broad-based land tax would produce an estimated 1.5% increase in GDP, or $24 billion, without changing the amount of tax raised.

Unfortunately, while the arguments for shifting the tax base towards land taxes are impeccable, there are several key factors holding politicians back.

Consider the proposal to merely junk stamp duties in favour of a broad-based land tax levied on all land holders.

As shown by the RBA, only around 6% of the housing stock is transacted on average in a given year:

This means that in a given year, only a small minority of households pay stamp duty (albeit tens-of-thousands of dollars of dollars). And once they pay it, they automatically become a roadblock to reform (“why should I pay tax twice”, is the common retort).

While having such a small group of taxpayers supporting services for the whole community is ridiculous, rather than governments sharing the tax burden by levying each household a much smaller amount on a regular basis, it is far easier politically to tax a small group than everyone.

The other major roadblock with land taxes is that they would be levied on retirees that are asset (house) rich but cash poor. They would, therefore, squeal like stuffed pigs if they were required to pay tax.

The obvious solutions to these roadblocks are:

  1. To overcome concerns around “double taxation”, provide a credit to anyone that has purchased a home in the past 10 years, equal to the amount of stamp duty paid, and then subtract the hypothetical land tax that would have been paid since the home was purchased.
  2. Allow retirees to accumulate their land tax liability, with the bill payable upon death (via the estate) or once the house is eventually sold (whichever comes first), with interest charged on any outstandings.

However, even with such arrangements in place, politicians would still face the option of maintaining the status quo and taxing only a small number of people each year (easy) versus reforming and taxing almost everyone (hard).

Add in a fierce scare campaign from the property lobby – especially if land taxes were extended beyond just stamp duties to replace income taxes – and the likelihood of achieving meaningful reform is slim, especially with the current useless crop of politicians.

[email protected]

Comments

  1. I reckon we’re the only nation that says “Yeah… Nah”.

    Classic.

    + agree with small land tax

    • Yeah I’m sure when they run out of money they will totally keep it low. Reverting to middle age economics to mask government overspending, how quaint.

      • You can make that argument about every tax being able to go up.

        Land is kinda different.

        It’s interesting that a common good can be owned by private people (landlords). Creating generations of landlords.

        Of which I must declare I’m one.

      • Or communists, Socialists, Buddhists, Christians, Muslims……….pretty much anyone in a position to subjugate humanity for their own benefit……But you keep blaming corporatists’ for high land values if it makes you feel better, not successive governments ALP/LNP that enact legislation allowing them to do it.

      • Land IS different, its arguably a necessity for shelter…….which is why its such an efficient tax (NOT necessarily a good thing). Efficient just means its really good at subjugating the wealth and liberty from an individual.
        You want shelter??? Pay the Tax! I can’t think of anything more abhorrent all on the false premise of common good.
        Reminds me of the movie GoodFella’s…..business is bad? [email protected]#k you, pay me, house burned down? [email protected]$k you, pay me.

      • “Wealth and liberty from an individual”

        Let’s go with wealth and liberty of a select 25-30% of individuals in Australia.

        The rest can do what? Go F*@# themselves?

      • “You want shelter? Pay the tax”
        Or to adopt your preference: have us all pay the landlord to take that extra trip to Paris and also ourselves, keep paying high taxes elsewhere incl income.
        Also on another point, commentators keep limiting the benefits of a land tax to recouping nearby infrastructure investments but it would of course also capture all the increase in GDP from all sources that otherwise goes to idle landholders.

      • NMT…

        If corporatists have the majority say in all things political…. yeah…

        Skippy…. stuff like TTP and Citizens United should have made that abundantly clear…

      • Land IS different, its arguably a necessity for shelter…….which is why its such an efficient tax (NOT necessarily a good thing).

        It’s not efficient because it’s a necessity for shelter, it’s efficient because land is impossible to hide or relocate and is comprehensively valued and frequently revalued.

        You want shelter??? Pay the Tax! I can’t think of anything more abhorrent all on the false premise of common good.

        Indeed. “You want shelter??? Pay the rent!” is so much more civilised. Just like “You need food??? Get a job!” is so much more civilised than “You need food??? Here’s you go!”.

        If you don’t want to pay any tax, you can move to countries that don’t have any. Most of them are not particularly nice places to live, however.

      • Lol, I love the way you think the only way to make house prices revert to mean is through a land tax. I’m in my early 30’s and have never owned a house, get rid of capital gains exemptions, negative gearing and start incentivising investment in productive assets and house prices will revert back to acceptable levels.

        Skippy,
        You forget to mention that he politicians are the ones keeping the TPP under raps. You keep blaming ‘Corporatists’ (who are absolute egregious whores for sure) but ignore governments complicity in their behaviour. Reveal contents of TPP and the uproar will sink it…….Its government thats the problem, fix that and Corporations will fall in line.

      • “Indeed. “You want shelter??? Pay the rent!” is so much more civilised. Just like “You need food??? Get a job!” is so much more civilised than “You need food??? Here’s you go!”.

        Why would you pay rent on land you supposedly own??? How bout I come round to your house and steal half of your stuff every year and give it to a whole bunch of idiots who couldn’t be bothered getting off their asses to actually earn their own way through life……..That would be stealing, but when the government does it…..ITS SOCIALIST UTOPIA!

        If money is no longer linked to a tangible physical commodity or asset……..Why is there a need for taxation through physical collection??????

      • Natural Trust is that you??
        I was surprised not to see NT commenting here as yet; but then I see his alter ego NMT, has landed. Now Jason where are you?

      • Why would you pay rent on land you supposedly own???

        You wouldn’t.

        Your argument against a land tax is that shelter is a necessity and therefore ‘You want shelter, pay tax!!’ is somehow ‘wrong’.

        You need to explain why, for people who don’t own homes, the landlord going ‘You want shelter, pay rent!!’ – a system you are quite clearly A-OK with – is any different. Once you’ve done that, you can have a swing at explaining why it is inherently better.

        Try to leave references to magic or other articles of faith (like, say, “the market”) out of it.

        (As an aside, a seemingly hardcore Libertarian trying to make arguments about “common goods” or “necessities” is a bit… odd.)

        How bout I come round to your house and steal half of your stuff every year and give it to a whole bunch of idiots who couldn’t be bothered getting off their asses to actually earn their own way through life…….

        Indeed. People too old or infirm to work should be just left out on the street to die, right ? Get those parasites off the public teat ! The homeless children can eat their bodies to survive !

        That would be stealing, but when the government does it…..ITS SOCIALIST UTOPIA!

        When the government does it, it’s administering society.

        If money is no longer linked to a tangible physical commodity or asset……..Why is there a need for taxation through physical collection??????

        The taxman doesn’t come knocking with a bag you put cash in.

      • “efficient tax (NOT necessarily a good thing)”

        You can make up your own private meanings as much as you like but it doesn’t change the normal meaning of “economically efficient taxation”. The only thing you have achieved with your own private meaning is crap communication.

      • You are right NMT. Obviously the author did not look at the reality that is Canberra’s recently commenced Land Tax. I drew the story about the Canberra disaster to the attention of David Collyer and he did not reply. I asked David if he was biased and he did not reply.

        Phillip Coorey is chief political correspondent for The Australian Financial Review and in his story he correctly stated:

        “ACT land tax might please economists but it’s expensive for everyone else.”

        One brief excerpt from the AFR Coory story was:

        “Barr (ACT Treasurer and Chief Minister) argues the move had been revenue-neutral, saying the government doesn’t collect more, it just collects it more efficiently. And he contends that there has been some trade-off such as an average drop of $200 for household insurance premiums.

        Ask most people, such as this column’s elderly neighbour, and they would gladly pay the extra for insurance instead of the thousands more for rates.”

        Coory says people are now paying thousands more for rates as you suggest NMT!

        There are many other problems with Land Tax that I and others have mentioned previously; not the least of which is the race for the bottom in reducing the size of building allotments (welcome to yard free compressed slum living) and the low Land Tax for the high income small office owner and the high Land Tax for the low income farmer and other productive people needing more land to earn their income. That is why the Federal Government cast out Land Tax in the 1960’s…It did not work and created a dogs breakfast of convoluted exemptions.

      • drsmithyMEMBER

        There are many other problems with Land Tax that I and others have mentioned previously; not the least of which is the race for the bottom in reducing the size of building allotments (welcome to yard free compressed slum living) and the low Land Tax for the high income small office owner and the high Land Tax for the low income farmer and other productive people needing more land to earn their income.

        Literally none of that is true.

    • The ability to use ‘Yeah … Nah’ in context should be a mandatory question on citizenship tests. Possibly the only question, as good as any poxy diploma from a phoenix RTO anyway.

    • Strange Economics

      Land Tax is the perfect method for “value capture” for all the property inflation from transport projects that Turnbull keeps talking about. Far better than once off developer levies. Will Turnboit now announce it for
      Airport rail lines, and the TGV thought bubble.

  2. Ronin8317MEMBER

    It would boast the market for goats too, as having one on your property makes you exempt from land tax. >_<

  3. It would actually be a boom for regional Australian towns.

    Lots of Australians have a secondary holiday home down the coast.

    They would need to rent it out to make some of the land tax money back – through Air BnB at the like.

    This would push down the price of ‘weekend getaways’ due to the increased amount of accommodation stock on the market.

    This saving in the price of accommodation would feed into local business as people will spend in local businesses.

    It will also reduce the price of houses down the coast, making it affordable once more for older Australian’s to ‘seachange’ into retirement. (i.e. moving from a high land value house in a CBD to a lower land value house down the coast).

    Making it more lucrative to get unproductive old people out of the city – means that we need to spend less money on infrastructure.

    • A universal nil exemption land tax would produce a boom in activity everywhere. The velocity of land would increase significantly, reallocating use to best and highest with every transaction.

      Where land tax is set at a level that allows a reduction in taxes on labour and capital, these factors of production will flourish. Ken Henry found 120 very bad taxes he wanted to scrap. You should want this too.

      Imagine an Australia with very low corporate taxes as loudly championed by the Tories. We would be a magnet for investment. We can have this, using a properly constructed land tax.

      Visualise a housing market where moving is cheap and easy with Stamp Duty removed.

      Stop looking this gift horse in the mouth.

      • Agricultural usage of land will always need to be treated specially somehow, as it is both a necessity and very low margin use of land.

        I remember reading something about it in the Henry Tax Report.

      • Yes. Henry recommended assessing land for taxation n a per square metre basis so very low value land falls out the bottom, even if a farmer own lots of it.

      • “Agricultural usage of land will always need to be treated specially somehow”

        If we really wanted to treat it specially then we would ban people from selling it for money or at least (given past mistakes) ban people from making a profit on it when they sell it. Somehow I don’t think people really want it treated specially. All tradable land is a market. Agricultural land is no different.

      • Obviously the author did not look at the reality that is Canberra’s recently commenced Land Tax, David Collyer. I drew the story about the Canberra Land Tax disaster to your attention and you did not reply. I asked you if you are biased and you did not reply.

        Phillip Coorey is chief political correspondent for The Australian Financial Review and in his story he correctly stated:

        “ACT land tax might please economists but it’s expensive for everyone else.”

        One brief excerpt from the AFR Coory story was:

        “Barr (ACT Treasurer and Chief Minister) argues the move had been revenue-neutral, saying the government doesn’t collect more, it just collects it more efficiently. And he contends that there has been some trade-off such as an average drop of $200 for household insurance premiums.

        Ask most people, such as this column’s elderly neighbour, and they would gladly pay the extra for insurance instead of the thousands more for rates.”

        Coory says people are now paying thousands more for rates as suggested above by NMT and others previously in these blogs.

        There are many other problems with Land Tax that I and others have mentioned previously; not the least of which is the race for the bottom in reducing the size of building allotments (welcome to yard free compressed slum living) and the low Land Tax for the high income small office owner and the high Land Tax for the low income farmer and other productive people needing more land to earn their income. That is why the Federal Government cast out Land Tax in the 1960’s…It did not work and created a dogs breakfast of convoluted exemptions.

      • naturaltrust. Rather than bringing my attention to materials elsewhere, how about you address the arguments raised in the article and Leith’s commentary above. That is the purpose of this comments thread.

        Stop making dubious debating points and start making sense.

      • So,,,you want to conveniently forget the facts and would like them repeated in every post I make. That sounds like a bureaucratic stonewalling, David.

        It would also be good if you would put the facts in your initial stories that are contrary to your bias for Land Tax. Your reporting is one sided.

  4. DrBob127MEMBER

    Great article: minor typo

    “(albeit tens-of-thousands of dollars of dollars). “

    • We don’t have a democracy you clown…..we have elective government whereby you get to vote for which bunch of corrupt power mad oppressors get to steal your wealth and liberty.

      • In other words, a democracy.
        It’s actually worse when you factor in the social costs. It breeds an effeminate and neurotic society e.g SJW & Feminism.

      • Lmmao the MPS posse is confused… decades of attack on democracy by libertarians in the form of neoliberalism blows up in their face and its all democracy’s fault…. Darwin award stuff…

        “So Herbert Nelson contracted out the PR services of the Foundation for Economic Education to concoct propaganda designed to shore up the National Real Estate lobby’s legislative drive — and the propagandists who took on the job were Milton Friedman and his U Chicago cohort, George Stigler.

        To understand the sort of person Herbert Nelson was, here is a letter he wrote in 1949 that Congressional investigators discovered and recorded:

        Quote
        “I do not believe in democracy. I think it stinks. I don’t think anybody except direct taxpayers should be allowed to vote. I don’t believe women should be allowed to vote at all. Ever since they started, our public affairs have been in a worse mess than ever.”

        “Quote
        “It is difficult to avoid the conclusion that the Foundation for Economic Education exerts, or at least expects to exert, a considerable influence on national legislative policy….It is equally difficult to imagine that the nation’s largest corporations would subsidize the entire venture if they did not anticipate that it would pay solid, long-range legislative dividends.”

        Skippy… got to love the – ownership – breathers unable to own their acts or history…. then have the gall to point fingers in a pray and spray setting….

      • NMT
        I think you have forgotten the old adage – “Democracy is a process whereby the prisoners get to elect their own gaolers”. The point, of course, is that anything else would be far worse. Just change your governments regularly (like your underpants, and for the same reason) and do your best to make an honest buck…

  5. Odd that it’s coming from the News Ltd stable. Also recollect that Turnbull briefly alluded to it being a tax accessible by the states and with the least dead weight cost of all.

    One out there scenario is the Feds offering incentives like the asset recycling programme for states to move to a more efficient taxation scheme.

    This scenario provides both arms of government with necessary cover. The Feds say “well its the states that are imposing it” and the states say “we had no real alternative because the incentives were impossible to turn down”

    Probably pure nonsense, but I hold some (badly battered) hope that Turnbull is up to something,

  6. On unimproved land, absolutely. On your house? As I blogged a few days ago many new home owners will not have paid off their stamp duty. Effective mortgage debt = House price + stamp duty – deposit, which leaves the SD component as a significant debt. And of course, landlords would be paid for by renters (though you could argue renters also effectively pay for SD on newer properties)….

    By ‘unimproved’ there needs to be a well thought through policy as to what percentage of the land is used as living space, and maybe (just maybe) how much land is reasonable space on a per head basis for the giant mansion owners. Other than that it’s a good solution.

  7. It kinda seems rather complicated imposing another tax, when the already existing tax rorts and other artificial bubble props are being ignored.

    All we have to do is modify (or stop) negative gearing, lower immigration and police foreign investment laws, and the problem of housing affordability would be solved. Think of all the currently foregone taxes in negative gearing, and the billions it could raise. OK, so some investors would be put off the idea of buying properties with such low returns; that’s ok, let prices fall to be more in line with rents, and again, problem solved.

    But I do realise more than anybody – housing affordability is not a problem the government wants to solve.

  8. BS argument
    land tax is going to hit middle class more than anyone
    large majority of rich people don’t own much land anyway while rich will still avoid tax with the approval of political elite

    • “large majority of rich people don’t own much land”
      ??? utterly bizarre statement.
      They own the vast majority of it. The inner-city prime real estate isnt owned by mums and dads, it’s probably some Saudi prince or Singapore’s sovereign wealth fund (hence the negative dead weight loss of land taxes).
      For wealthy individuals, land is definitely a smaller proportion of their overall wealth than it is for the middle class (which I suspect is the point you’re trying to get across). That’s because the wealthy own other types of assets. This doesnt diminish the significance of their holdings of land on Point Piper or in Toorak, it just points to how obscenely unequal wealth is distributed.
      Mums and dads see the majority of their wealth tied in housing, simply because they have relatively fewer assets. That $500,000 block of land that granny owns will have a significantly lower taxation burden than the $billions in land holdings that Harry Trig owns – particularly if you levy the tax on a square meter basis.

      • land tax is wealth land, not income or consuming tax so land tax will tax only one kind of wealth that is disproportionately large part of middle class wealth and minor wealth class of the rich.
        Middle class will be paying large percentage of income while rich will be paying almost nothing relative to their income. Not to mention that rich already pay land tax on all of their investment, second, third and holiday homes anyway so this change will make their tax almost not different at all.while middle class people who only own their home can expect huge rise in tax and drop in real after tax income – they’ll become poorer.

        Harry Trig doesn’t own much land, he owns meriton. In his case every dollar he pays in land tax is business cost that his company deducts from corporate tax. Meriton already pays land tax, this broadening will make no difference.

    • “large majority of rich people don’t own much land anyway”

      Yeah, a small block of land in Toorak isn’t much land.

      Some people don’t seem to realise that land tax is on the value of the land.

  9. Well it certainly won’t happen at 1 percent annually like the article suggests. Nobody will go for that. Most can’t afford it. It’s too high.

    • Really,
      I earn approx, $65,000 a year gross.
      Going to the ATO simple tax calculator I get a tax estimate of $12,672
      If I paid the same amount of PAYG towards a Land Value Tax that is set at 1% then I’d need to be living somewhere that is valued at $1,267,200
      It looks to me that most middle class households would actually save money, unless of course they weren’t declaring their income, or are currently using the system to their advantage in order to minimise their tax payment.

      • Today's Empire Tomorrow's Ashes

        Because no middle income families are sitting in sh$tty Sydney or Melbourne homes worth 1-2Mill where most of that value is in the land?

      • @TETA

        Read the article again, especially solution 2:

        Allow retirees to accumulate their land tax liability, with the bill payable upon death (via the estate) or once the house is eventually sold (whichever comes first), with interest charged on any outstandings.

        Presumably this could be extended to anyone who has managed to accumulate massive wealth in their house through no fault (read: effort) of their own.

        Or they could … you know … sell. And enjoy their comfortable retirement.

      • footsore, I think you’re suggesting that land tax will replace your income tax? It won’t. It replaces stamp duty.

      • @infotech

        I’m an in for a penny, in for a pound kind of guy.
        I’d hope that if a Land Value Tax came in it could remove not just income, but payroll and corporate tax as well.
        If we are going to talk about things that are unlikely to happen, I’m dreaming big.

      • Even StevenMEMBER

        @footsore: if LVT were to replace income tax also, it would probably need to be 5% p.a. or higher.

        In which case no one would want to own property … or alternatively would move into high rise apartments to lower their LVT allocation. There needs to be a broad array of taxes to stop distortions.

      • “In which case no one would want to own property”

        That’s part of the idea. No one would want to own property at the current prices. Ergo, property would be much cheaper if the land tax was a rate as high as 5% p.a.

  10. There’s nothing progressive above land tax in the real world of modern Australian real estate. It might be pocket change for those on 300K – but for those on 40K who bought cheap vermin ridden homes in the inner cities or run down shacks in some once forgotten coastal town 15 years ago – it will be a life wrecking impost. It’s not my fault that people now want to live where my family and I have lived the past 15 years. Quietly raising our family, running a small business, working for low wages in local businesses – while tending to aging parents.

    Around here, there’s been no infrastructure improvements other than a freeway between 2 bottle necks – that was only built to lay the ground work to eventual local land releases (which I unlike the waterfront greens support). I’m not sure where my wife and I would find an extra 6000 to 10000 a year in land tax on top of the second highest rates in NSW. I guess we would have to sell up to some rich prick from Sydney on 300-500K who wants another IP holiday house.

    The same holds true for thousands of families along the NSW coast, and in the inner cities. Places no one wanted to live 15-20 years ago. Cheap affordable housing where if you were smart about your money and your spending choices made for a reasonable lifestyle. My last 10 year passport that just expired doesn’t have one stamp in it. But my kids are healthy and don’t whine for endless give me’s.

    Now some pretentious smart pricks like Adam Creighton, and that well known tosser Michael Pascoe think screw us, you don’t deserve to live in a place like that if you aren’t earning the big bucks like us. So sell up and piss off out west to some forgotten town from the 19th century – ’cause let’s face it if you are low income then you’re a loser and we don’t want people like you around us in our newly gentrified coastal towns and inner city hipburbs.

    Thankfully, no govt with a functioning brain will touch land taxes. That pretend govt in the ACT will be gone at the next election – with a wholesale revolt by the voters against their ever increasing land taxes. Watch how many Labor voters tactically switch their votes to end that little growing nightmare in a town with a collapsing workforce.

    That stamp duty in NSW has rocketed far beyond it’s original impost is not my fault. And it’s not my personal financial responsibility to fix by being screwed over and driven out my home so some rich prick from downtown Sydney can buy my home so they can rent it out on AirBnB to other rich pricks for 5000 a week.

    Broadening and increasing the GST was an easy sell compared to this – and any govt trying to bring in a land tax of 1% on the land values of today’s real estate will be crucified. So maybe it’s time for all those who think themselves so bloody smart to actually start working on some tax reforms ideas that might actually pass the pub test – let alone the roasting they would get at a suburban BBQ.

    Yes taxes need to increase in Australia – but don’t single out middle Australia for an easy hit – it simply won’t sell and pretending it has any chance of getting up is just an insult to the intelligence of working people. MB is one of the best economic and political news sites in Australia today – but on this issue it’s as daft as Pascoe.

    • Even StevenMEMBER

      You must have missed the reverse mortgage aspect of introducing an LVT. You don’t NEED to find $6000 – 10000. Read the posts before jumping to conclusions.

    • “don’t single out middle Australia”

      I wasn’t aware that middle Australia owns residential property in Point Piper, Darling Point, Edgecliff, Bellevue Hill, Toorak, Hawkesburn, Vaucluse, Portsea, Mosman or Spit Junction. Or are you suggesting land in these suburbs wouldn’t be subject to land tax because they are not “middle Australia”?

      • Nearly all of Sydney is valued over a million dollars. Dumps in Tempe. Knock downs in Werri on the south coast. The issue isn’t about premium housing in point piper it’s about average everyday people facing cripplinng land taxes for over priced housing that 10 years ago were affordable housing for average working people. Dont try an equate the home where a teacher and a nurse live with where Malffle and his thieving banker mates live. That’s just a stupid attempt to distract from what is an obvious flaw in the whole band tax debate.

        Anyway none of this is going to happen as it would devastate the real economy and annihilate any govt that tried to introduce such.

      • “Nearly all of Sydney is valued over a million dollars”

        No. The majority of Sydney does not mean the same as “nearly all” of Sydney.

        “The issue isn’t about premium housing in point piper”

        Oh. So why did you say “single out” middle Australia? Middle Australia is not being “singled out”. If it gets land taxed then it will be taxed consistently along with ultra-rich suburbs, i.e. a lot less than ultra rich suburbs. You’re not suggesting there should be no income tax simply because it falls on middle Australia as well as better off people are you?

        “cripplinng land taxes for over priced housing”

        The issue is about switching from stamp duty to land tax. If land tax is crippling then stamp duty already is. Even if you want to call the taxes we pay “crippling”, isn’t it better to choose the tax regime that causes far less damage to the economy? By the way, part of the reason land is over priced is because there is no land tax on it.

        “it would devastate the real economy”

        If land tax would devastate the economy, then it is already devastated even more by stamp duty.

  11. So 30 years from now how much will that reverse mortgage add up to be. Such a novel way to levy taxes – just take a mortgage and you can pay ya taxes. Get real that is not going to fly with middle Australia facing 30 years of land taxes.

  12. All changes to our economic/tax system produces one off winners and losers. Paying compensation to the losers is pointless.

    However, regarding LVT and Stamp duty.

    1) any announcement of an impending LVT will automatically be capitalised into lower selling prices. So no need to compensate anyone after any proposal.

    2) Most homeowners will be better off from a shift onto land values away from income/capital. The minority that are not better off are by definition a net burden on the rest of society. Why you’d want to pay them compensation for that is puzzling.

    • Are you seriously suggesting a nurse on 45k or a cleaner on 35k living in an old house in Croydon or Arncliffe is a burden to society. It’s that type of elitist thinking that pisses so many people off. That a bunch of forex dealers want to rig the tax system to pay less income tax while forcing the remaining low income workers out of the inner cities cuts to the gross inequality of land taxes as so far.

      • If someone on $35k is sitting in a $1m house (price to income ~30x), they would be insane not to cash out. And if they choose not to, there’s the reverse mortgage option (as has been pointed out ad nauseum).

      • And where would you like my family to move to – Harden, Cootamundra, Ghost towns of empty houses from the age of rail baking away in 40+ heat 6 months of the year.

        We have lived happily in our home for 15 years. Within 5 years we’ll be finally debt free and will begin building up some super. Having being self employed most of my life I have no super beyond my home – and such is true for millions of self employed people – where on low incomes paying the bills and mortgage comes way before any notion of super.

        My wife due to health issues struggles through chronic pain to work 3 days a week – driving an hour to work in Wollongong – and like most women she has only a small amount of super. Through hard work and her own smarts my daughter will get a job at the local surf school as soon as she leaves school at at the end of the year. What would she do in Harden for a job. My son is in year 8 and travels an hour each way to the only selective school on the south coast – Smith Hill might be a run down state school compared to the local Anglican grammar school – TIGS – but it’s got a good cohort of kids from greater Wollongong – who want to learn without being bullied for being a bit nerdy. That doesn’t mean I agree with how state schools have become or even the idea that we should have selective schools at all – but I didn’t make the school system the way it is.

        So why should I be forced to move out of what was once a cheap house before the forex dealers and their lawyer mates from downtown Sydney decided our little town was so cool to buy a holiday home in for a million dollars. I have no issue with large scale new land releases along the south coast – but I’m not in charge of that decision am I.

        Meanwhile, why should a cleaner or nurse or teacher or fireman or policeman or garbo or shop worker who bought into Arncliffe or Tempe or Croydon or Epping or Matraville 15-20 years ago or all the other suburbs of Sydney have to move out of their over priced homes due to crippling land taxes or take out a reverse mortgage to then pay such taxes. They didn’t do anything to screw up the property market in Australia. Why should they be sent into ever greater debt to pay land taxes or forced to move to some crappy unit in Liverpool. And what about today’s younger families where both parents have no choice but to work full time to pay off their crippling mortgages on the 800K house they bought 2 years ago. So what if you’ll give them a few years stamp duty credit before you whack them with 5-10K annual land tax bills in five years after their SD credit is all used up. They’ll be jumping for joy at that prospect on top of their massive loan repayments.

        The ignorance displayed in so many of these articles and accompanying comments about how most people actually live in Australia is just astounding.

      • Saying that we should all enjoy an equal share of the value derived from natural resources, which what an LVT does, is the very opposite of elitism I’d have thought.

        Land, by definition is all that is not supplied by human effort, thus irreproducible. Occupation of value location, that is Land which has gain a scarcity value, therefore puts a burden on those excluded from that opportunity. The exact compensation we owe the community (tax) is the rental value of land our property occupies.

        Land by value is more concentrated towards the wealthiest in society than income or capital. Simple calculations show that a shift from income/capital taxes to public revenue from land rents would leave a typical working household tens of thousands of dollars better off, in their pockets, every year.

  13. To overcome concerns around “double taxation”, provide a credit to anyone that has purchased a home in the past 10 years, equal to the amount of stamp duty paid, and then subtract the hypothetical land tax that would have been paid since the home was purchased.

    Of course, if land tax is meant to be an equivalent replacement for stamp duty then there is no need to provide a credit for stamp duty and start charging land tax on a particular piece of land. Simply apply land tax and no stamp duty to future transfers and leave owners who have already paid stamp duty on their land alone.