Family home safe from land tax but stamp duty needs to goDOWNLOAD
Sunday 2 May 2010: Deloitte Property Tax partner, Max Persson, believes the Government’s rejection of the Henry Tax Review’s suggestions about land tax and stamp duty, is to be expected but that stamp duty still needs to go..“Henry recommended that all land should be subject to a land tax to offset the removal of stamp duty. While the Government has said it will never support broadening land tax to the family home, expanding the base of the land tax system to apply to all commercial and industrial property, as Henry recommends, would not only provide a level playing field, but could also fund a reduction or abolition of stamp duties on the transfer of these properties.”
“The possibility of tax on the family home would have been extremely unpopular, so it’s not surprising that the Government has made its position on this clear,” said Persson.
As anticipated, today’s Henry Review has been very critical of stamp duty as a means of taxation, going as far as to say that such a tax is “inconsistent with the needs of a modern tax system”.
“While stopping short of an all-inclusive land tax, however, the Government has left open the possibility of adopting Henry’s proposed incremental reforms to broaden the land tax base,” he said. Persson considers a movement in this direction would be welcomed by the property industry.
“The report has again highlighted what the industry has been saying for a long time; that stamp duties are inefficient, volatile and inequitable, and that the states needs to move away from these taxes to improve Australia’s productivity.
“Expanding the base of the land tax system to apply to all commercial and industrial property, as Henry recommends, would not only provide a level playing field, but could also fund a reduction or abolition of stamp duties on the transfer of these properties.”
The Henry Review also recommends levying land tax using an incremental marginal rate schedule and thresholds determined by pre-square-metre values, ensuring that most agricultural land would not fall into the net.
To view all of Deloitte’s media releases on the Henry Review, go to the Deloitte Henry Review website here.
NB: See our media releases and research at www.deloitte.com.au