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{{propApi.successMessage}} {{region}} Change locationReduce taxation on housing
Reduce taxation on housing
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HIA calls for the next ACT Government to:
- Waive the Lease Variation Charge (LVC)
- Provide for a portion of LVC on larger, higher impact projects
Taxation cannot be avoided, as it funds the shared services that benefit the whole community, such as education, healthcare and transport infrastructure. However, it is a basic truth that investment will move to where taxation is limited or of least impact. Put simply, the more something is taxed, the less it will be produced.
Modelling commissioned by HIA by the Centre for International Economics (CIE), demonstrated that when direct, indirect and hidden taxes are included, the total tax on a new house can be as much as 44% of its purchase price.
In the ACT, a unique and particularly egregious tax on new dwellings is the Lease Variation Charge (LVC). The LVC is a ‘betterment tax’ that is levied on any presumed increases in the value of land arising from a change in development rights.
The LVC is detrimental to the feasibility of housing projects and contributes to the current housing affordability and rental crisis in Canberra. Builders and developers report the LVC is one of the major factors undermining the take up of the government’s 2023 change to allow unit titling in RZ1, and addressing the ‘missing middle’ of affordable, low density multi-residential development in RZ2 across the Territory.
Despite the ACT Government maintaining an urban development policy to promote 70% of new dwellings being built within the city’s existing urban footprint, an ongoing problem has been the lack of acceptance by many within the community of development in their neighbourhood. HIA proposes a portion of LVC on larger, higher impact projects be hypothecated to community identified and led projects in the immediate surrounds of those developments. With the new planning system being designed to put greater emphasis on the character of neighbourhoods and improved wellbeing of residents, the new district strategies can be used to guide eligible projects.
- Waive the Lease Variation Charge (LVC) for lower density dwellings, including RZ1 unit titled single dwellings, and RZ2 multi-residential up to 6 dwellings.
- Provide for a portion of LVC on larger, higher impact projects to be hypothecated to community identified projects in immediate surrounds, to garner greater support for infill development. District strategies are to guide eligible projects.