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There are two myths out there in the community regarding real estate.
The first is that only the rich own investment properties. The second is that they can well afford to pay the land tax bill.
Both of these statements are untrue, argues the Real Estate Institute of South Australia (REISA).
President of REISA, Mr Ted Piteo, says “One of the more frustrating aspects of the debate about land tax is the commonly held perception that the rich can afford to pay land tax and therefore it isn’t an issue. The arguments about abolishing land tax or at the very least, making it more equitable don’t seem to gain much public sympathy”
“However, statistics recently released by the Australian Taxation Office show that almost three quarters of people with at least one rental property had an annual taxable income of less than $80,000. This flies directly in the face of the perception that only the rich own more than one property”
“It is also critical to point out that it is not the owner of the property who pays the land tax bill, but the tenant. Land tax is invariably passed to the tenant who then faces a higher rent – and so it is actually not the rich who pays the land tax bill but the tenant. If this is not a direct impediment to housing affordability, I don’t know what is” said Mr Piteo.
Land tax also causes significant financial difficulties for landowners who are in receipt of a pension or part pension. REISA has learned of many examples where pensioners have been forced to part with a second property because they could not afford to pay the land tax bill.
“The effect of land tax on pensioners is particularly insidious. Not only is their second property taken into account when assessing their entitlement to a pension, it is then also taken into account for the imposition of land tax. Pensioners are being penalised twice. It’s a clear case of double dipping by the Federal and State Governments” said Mr Piteo.
“The State Government really needs to take the issue of property taxation seriously. Relying on volatile and ineffective state taxes that impede our competitiveness on the national stage and which directly disadvantage homeowners and buyers is not the way forward”
“We can talk about increasing thresholds and exempting groups but this still won’t solve the fundamental problem of the State Government’s over-reliance on property taxes as a means to prop up their revenue shares”
“Wholesale tax reform is needed and REISA calls on all Governments to begin this process as soon as possible”