A respected industry body is concerned by the government’s response regarding the introduction of a land tax in their territory, saying that it could seriously undermine its “fragile” property market gains.
The Real Estate Institute of Northern Territory has expressed concern over the introduction of the land tax and chief executive Quentin Kilian said it will have a massive impact.
“A land tax will impact every Territorian, not just those that own property,” the CEO said.
Land tax is currently in every state and territory in Australia, with the exemption of the Northern Territory.
Most of the laws between states are comparable with slight variations but typically exempt the permanent residence of people.
According to the REINT, a land tax would impact renters whose landlords will pass on the tax, agricultural businesses that will be taxed more for their large properties and even small businesses who will see an impact on cash flows.
According to the REINT, the move would also affect elderly people, and low or fixed income people would be impacted by a tax of even just 0.5 per cent, adding a tax bill of $1,825 to their expenses.
“The government’s discussion paper on this new taxation regime indicated that if a land tax were to be introduced, it would be in addition to, not in place of, stamp duty,” the CEO said.
“So, a person purchasing property in the Territory would be hit twice for taxation.”
The REINT said that a new tax regime or increased taxation affecting the property market is ill-timed given the current state of the market across the Territory.
“There is empirical evidence from markets such as New Zealand that have shown [that] a 1 per cent land tax led to a fall in land values of 16.7 per cent,” Mr Kilian said.
The Darwin property market has seen some renewed interest from the investor market, but Mr Kilian believes that a land tax would only drive investors away.
“The REINT feels that any additional tax measures applied to this fragile property market will have highly detrimental and long-term impacts, even to the point that they could increase the population decline.
“We are therefore calling on the government to absolutely rule out the introduction of a land tax for the Northern Territory in the next budget.”