Tax hike overshadows growth opportunities in WA

Tax hike overshadows growth opportunities in WAThe third consecutive year of land tax increases, announced by Treasurer Mike Nahan in last week’s Western Australian state budget, risks stymieing prospects for growth in the west.The rise in land taxes will hurt small businesses, investors and traders of mid-range buildings, says the Property Council’s WA executive director Joe Lenzo.Under the changes, a $300 flat land tax will be applied on land with an unimproved value of between $300,000 and $420,000, with land tax rates lifted on most properties valued above those levels.The tax applies to commercial property and residential investment properties, and follows a 10 per cent increase in land tax rates in last year’s budget.From 1 July, land tax rates will increase for all but the top threshold. Tax payable on land with an unimproved value of $1 million will rise to $17, up from $770.The Barnett Government predicts the new land tax scale will raise $184 million in additional revenue in the next financial year, and an additional $826 million over the next four years.The Property Council has called the move a “land tax cash grab” which risks the effectiveness of other growth initiatives.”Many owners of medium to lower priced properties will be hit by huge and unprecedented land tax increases,” Lenzo says.The Property Council has welcomed other aspects of the Budget, including the promise of additional government asset sales and leasings, funding of home loans and the retention of the First Home Owner Grant for new homes.However, Lenzo says that the local property sector is “calling for an end to the continued reliance on large, ad hoc land tax increases and piecemeal changes to tax thresholds to underwrite the State Budget.”The government expects to collect $939 million in land tax next financial year, up 26 per cent.”It is time for a genuine review of the tax system to ensure that it is fairer and contributes positively to the state’s growth priorities,” Lenzo concludes.