Property tax increases would worsen affordability, harm economy

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The New South Wales government has been urged not to follow the lead of Victoria and hit foreign buyers with increased property tax rates.
Last month Victorian Treasurer Tim Pallas announced that from 1 July foreign buyers would face increased stamp duty and land tax rates as the Victorian government looked to ensure they provide their “fair share” of government revenue.
A report in News Limited publications yesterday claimed NSW Treasurer Gladys Berejiklian is considering hitting foreign buyers in NSW with an increased land tax rate.
The Victorian move was criticised at the time by people who believed it would scare off foreign buyers and the Property Council of Australia (PCA) has warned the NSW government that making a similar move would damage both the housing market in the state and damage Sydney’s reputation.

“NSW needs more housing – a decade of under supply is responsible for Sydney’s housing crisis,” Ms Fitzgerald said. Turning investors away – by imposing a huge new tax – is one way to ensure it doesn’t get any better,” PCA NSW executive director Jane Fitzgerald said.

“Talk about sending the wrong message to the rest of the world – you can’t aspire to be a world leading global city and whack a huge new tax on foreign investors at the same time,” Fitzgerald said.

While many have used foreign investors as scape goat recently for current affordability issues in Australia, Fitzgerald said they have had a positive impact on the market.

“Nationally, foreign investment is underpinning Australia’s record levels of new housing construction – rather than stopping Australians from buying a home foreign investors are helping them do just that,” she said. 

“Given current economic conditions, it would be a gravely risky strategy with implications for both housing supply and housing affordability in NSW.

“There are international investors right now considering whether to build residential housing in NSW. If they choose to go elsewhere our housing affordability crisis will worsen.”

Fitzgerald said if the NSW government was committed to fixing affordability issues then they would address the burden placed on people by stamp duty.

“If the NSW Government really wants to do something to benefit homebuyers it should get rid of stamp duty.  The tax take from it alone has doubled in the past five years from $4 billion up to $8 billion.”

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