Home Property Australia ESL increase out of control – urgent action required

ESL increase out of control – urgent action required

  • September 04, 2014

ESL increase out of control – urgent action required

The State Government did not fully inform South Australian property owners and investors when it increased the Emergency Services Levy (ESL) in its June Budget.

“The State Government’s Budget Papers outlined the increased ESL rates would result in most commercial property owners incurring an increase in ESL rates of around 23 per cent,” said Acting Executive Director of the Property Council of Australia (SA Division) Lino Iacomella.

“However, in a massive shock for South Australian property owners and investors, the real increase is more than double the State Government’s Budget estimate. In some cases the increases have exceeded 100%.

“It seems property owners, investors and industry groups were kept in the dark.

“And what is the actual reason the ESL increase has careered out of control? The ESL is based on revalued land, which is producing a ‘turbo-charge’ effect. Higher rates on higher valuations have resulted in skyrocketing ESL assessments.

“The State Government and its taxation agency RevenueSA should have anticipated the ‘turbo-charge’ effect of a large increase in the ESL rate combined with a land revaluation.

“Sadly for South Australian property owners and investors, the ESL has become a second land tax.

“The last thing the South Australian economy needs right now is yet another land tax, particularly considering our state already has one of the highest land tax regimes in the country.

“A skyrocketing ESL – resulting in another land tax – will make it even harder for South Australia to reposition itself as a growth state. Producing the right economic policy settings is crucial going forward.

“Businesses that own and rent properties will need to redirect funds away from investing in the business to paying higher state taxes.

“The State Government must intervene immediately to make the ESL increase fairer and less harmful to the South Australian economy.

Mr Iacomella said the Property Council is calling on the State Government to immediately take the following remedial actions:

  • apply a cap to the actual ESL assessments in line with the budget announcements; and
  • gradually implement the increase in the ESL levy over a five year period.

“We are aware that the ESL assessments are currently in the mail, however, the Government needs to move quickly to implement these remedial actions in order to minimise the harm caused to individual businesses, state investment and the broader economy”, said Mr Iacomella.