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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-03-26 Daily Xml
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LAND TAX

The Hon. D.G.E. HOOD (15:16): I seek leave to make a brief explanation before asking the Minister for Minister for Mineral Resources Development, representing the Treasurer, a question about land tax.

Leave granted.

The Hon. D.G.E. HOOD: I have been surprised and concerned in recent months to hear from a number of constituents regarding very large increases in taxes and levies; for example, the oyster levy (now withdrawn), and land tax.

Late last year, one constituent contacted me to complain about an outrageous land tax bill he had received. Last financial year, this businessman paid $44,938 in land tax. This year, given an increase in land value and the way in which the tax is calculated, the constituent was sent a land tax bill for $144,500. That is more than a 200 per cent increase in taxes in one year for the same property. He has told me that he cannot afford to pay this amount, and he has indicated that he is being forced to consider laying off staff specifically for the purpose of paying his land tax bill.

Businesses in South Australia will pay about $900,000 per year in land tax on property worth $25 million, which is approximately the price of a reasonable sized piece of commercial land near the city. This $900,000 is about $283,000 more than the same businesses would pay in Tasmania, which is the next highest taxing jurisdiction, for a similarly valued property. It is also about $435,000 more than they would pay in Western Australia, and around half a million dollars more than they would pay in Queensland. This outrageous tax is crippling business investment in this state, and it is stopping South Australian families from getting work. My questions are:

1. Will the Treasurer order an immediate freeze on land tax property valuations to provide relief for businesses and investors?

2. Will the Treasurer increase land tax thresholds and cut rates to bring South Australia's property tax regime at least into line with other states, specifically by immediately increasing the base threshold from $110,000 to $250,000, and the maximum threshold from $1 million to $2.5 million, at a rate of 2.5¢ per dollar?

3. Will the Treasurer abolish stamp duty on non-residential conveyances?

The Hon. P. HOLLOWAY (Minister for Mineral Resources Development, Minister for Urban Development and Planning, Minister for Small Business) (15:18): Of course, every government would like to reduce taxes. As we have seen from members opposite, there are also plenty of demands for increased expenditure. However, we all know that the skill of government is in balancing the two. We are now in an election year, and we certainly look forward to seeing what the opposition will do. What the opposition has already done, of course, is put off any hard issues by saying, 'We need to have a look at the budget.'

So, on the one hand, opposition members pretend that somehow or other there is some solution where you can increase expenditure and increase taxes, while on the other hand they say they do not have the data.

The Treasurer has said that every government would like to reduce taxes if it had the capacity to do so. I remind the honourable member that this government has undertaken significant tax reform. In February 2005, there was an increase in the tax-free threshold from $50,000 to $100,000. There were adjustments to the land tax bracket and rate structure to provide broad-based relief, and there was also the introduction of specific land tax exemptions. The land tax reduction package also included land tax rebates in respect of the 2004-05 land tax assessment. In the 2005-06 budget, the tax-free threshold was raised to $110,000, and there was also the introduction of specific land tax exemptions for home-based businesses and residential parks, and also broader access to primary production exemptions in rural areas. So, in recent years, this government has increased thresholds in relation to land tax and provided some relief—indeed, as we have done in relation to payroll tax.

The Rann government has also introduced a range of tax release reforms in recent years that will total nearly $3 billion by the years 2011-12, including: the phased abolition of rental duty; the abolition of mortgage duty on owner-occupied residential loans and refinancing effective from 1 July 2005; first home owner stamp duty concessions totalling $55 million; cuts to mortgage duty at a cost of $415 million; the abolition of debits tax totalling $367 million; and payroll tax relief in that time of over $500 million. So, this government has significantly reduced taxes in this state.

Obviously, we would like to do more, but it is quite clear that, in the current environment with the global financial crisis, this state is being impacted heavily in relation to revenues. We have already seen other states that had far stronger financial positions than South Australia—I am talking about Queensland and Western Australia—moving into deficit and having significant problems in relation to their budgets. That is the environment in which this state government will be looking at issues with the forthcoming budget.

We would like to do as much as we can, and it is important that we keep our state competitive, but obviously we also have to ensure that we are fiscally responsible. If we are not, the cure for fiscal irresponsibility could be worse than the disease. However I am sure that, in his consideration of the budget over the coming months, the Treasurer will be weighing up all these issues.

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