MORTGAGES BECOMING IMPOSSIBLE: INFLATED BY THE LAND VALUE COMPONENT AT MORE THAN 80% OF THE AVERAGE HOME IN AUSTRALIA

A GREATER SUPPLY OF HOMES WON’T FIX LAND PRICES.

Of course Victorian property investors are upset! Their land tax bills have gone up. The federal tax regime encouraged them into real estate, but now their state holding charges have increased. Some of them are leaving Victoria. Others are selling up and going to invest in real estate in other states.

Tom Elliott is bemoaning the land tax situation on 3AW once again this morning, this time with Victoria’s leader of the opposition, John Pesutto. He’s pretty full-on about it, too: “We can’t afford to lose these investors.”

Isn’t land tax assisting Victoria’s very poor budgetary situation? With the dip in land values and landlords leaving for other states, doesn’t this give a better chance for a young family looking to buy their own home? Some lose: others win. The losers are certainly getting a great hearing! What state taxes would these people like to have increased instead?

All of which brings us back to the basic point that land tax is a very fair and efficient tax, the only tax that can’t be passed off into prices. After the 1893-97 depression and the colonies had formed a Commonwealth government in 1901, a federal land tax office was set up to administer a land tax in 1910 to break up the big squattocracies’ estates, ever before any consideration of income tax.

Australia led the world with land taxes at all three levels of government. In the USA, most taxes also came from property, as below, but not as significantly as in Australia. [The US likes to promote the canard that it can’t tax land incomes federally!]

Yes, there is another side to land taxes, Tom Elliott and 3AW!

WHO GOT TO THEM?

“A simple yet sovereign remedy which will raise wages, increase and give remunerative employment, abolish poverty, extirpate pauperism, lessen crime, elevate moral tastes and intelligence, purify government and carry civilization to a yet nobler height, is to abolish all taxation save that on land values.”

• Fifth Inter-Colonial Congress of Trade Unions (Barnard, History of Australia, p.417)

Unions have now descended into expropriating a greater proportion of wages to invest into superannuation funds “for workers’ retirement”. ‘Financialisation’ of workers and a tax gift for the uber-wealthy? The Commonwealth government was going to run out of money for pensions? How? Or maybe can’t deliver a universal income? Why?