“The dog’s breakfast of state land taxes needs reform”

WE agree entirely with Tanya Plibersek and the Urban Development Institute of Australia’s Stephen Holmes that where capital works were once funded from local government rates, which can’t be passed on in lot prices, the more recent practice of hitting sub-dividers with up-front charges adds, of course, to the price of sub-divided land.

For the sake of more affordable housing, we should revert to the former system.

Whilst that situation is being remedied, we can also hope that Ken Henry’s review of the tax system has the gumption to recommend the elimination of the exemptions, thresholds, multiple rate and aggregation provisions that make state land taxes such a dog’s breakfast.

The principle at issue here is that local and state governments have an ongoing interest in capturing on the public’s behalf at least part of the uplift in land values provided by public infrastructure.

Up-front charges, including headworks charges, don’t do this; nor do our misbegotten state land taxes.

Bryan Kavanagh
Research Associate, Land Values Research Group
Melbourne, Vic