Current at: 22 April 2008
The announcement by the Prime Minister to conduct ‘root and branch reform of the Australian taxation system’ must consider measures to reduce taxation on new residential property.
HIA’s Chief Executive – Policy, Chris Lamont, said any review of taxation must consider the crippling taxes levied on residential property which are severely undermining housing affordability and restricting the supply of affordable new housing.
The amount of tax levied on new housing has broken all records and in some states and is adding $100,000 to the median new house price.
“Development charges, combined with GST and other state statutory charges and taxes, are having a crippling effect on housing affordability. There is an overdue need to realign Commonwealth-State Financial Relations,” Mr Lamont said.
HIA has expressed concerns that faced with growing liabilities in health, education and other social services state, territory and local governments have looked increasingly towards taxes and charges on new housing to pay the bills.
“There is now a commitment from the Federal Government that all levels of government need to ‘pitch in’ and invest more in our cities and urban centres,” he said.
HIA contends the differential in taxation revenue between the Commonwealth and the States has forced state and local governments to rely more and more on highly variable property taxes and development charges to meet the cost of community-wide infrastructure, with obvious implications.
“Perhaps this review should consider a back to the future proposal, where states receive a percentage of income tax revenue for total responsibility for the delivery of such services as education, health and transport,” Mr Lamont said.
“HIA has long argued that a revised income tax distribution model would assist in ensuring that equity is restored in the allocation of tax revenue. “Sustainable and long-term restoration in housing affordability involves fundamental reform in Commonwealth-State Financial Relations.”