Land tax grab a burden for all
Many Townsville investors who own buildings or land assets in the region will have recently received their land tax notices. These will be the first assessments issued since the State Government’s land tax increases were adopted in the State Budget.
While most Townsvilleans will never directly pay land tax, the effects of the tax wash through the whole economy, increasing the cost of doing business and impacting on all of us.
Land tax is a state tax calculated on the freehold land you own in Queensland. Originally introduced as an emergency revenue raising initiative at the height of the Great War, the tax has become a ubiquitous cost of investing in Queensland property.
While a competitive and flexible land tax regime can be absorbed without too much economic discomfort, outdated thresholds or dramatic increases can result in significant pain.
Most local businesses lease their premises from larger landholders that are liable to pay land tax. For many of these businesses the Government’s 25% increase to the highest threshold of the tax will result in an immediate rent increase. For others, the sting of the tax hikes will be felt when their leases are renegotiated.
With electricity, water, rates and other running costs rising dramatically, these tax increases have come at an acute time for the Townsville’s business community.
Beyond the impact for tenants, the increases have also made our tax regime significantly less competitive than our southern neighbours, risking a reduction in investor interest in local opportunities.
Companies weighing up the merits of investing in a significant property asset in Townsville will face a new tax equation, which will see the land tax bill 13% higher than a similar asset in NSW, and 4% higher than Victoria. Unlike NSW, which has annual valuations and annual reviews of thresholds, Queensland has been subjected to a decade of bracket creep. With the Queensland thresholds unlikely to be reviewed any time soon, this equation is only set to get worse for local investments.
Over $1.5 billion in economic activity is generated annually by Townsville’s property industry. Through this activity, the sector employs 12,932 locals. When you consider the economic importance of the property industry to the Townsville region, you can understand the risk that any potential decline in investor activity might pose for local jobs and the city’s prosperity.
The property industry is Queensland’s biggest taxpayer, already contributing a staggering 53.7% of all state and local government taxes, rates, fees and charges. Decisions by policymakers in Brisbane to squeeze more revenue from this part of the economy are short-sighted and ignore the flow on impacts of these taxes on the entire community.
The Property Council will continue in our efforts to highlight the hidden effects of property tax increases on the cost of doing business, our state’s economic competitiveness and everyday Queenslanders.