Land tax to solve Australia’s housing crunch?

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Tackling Australia’s housing crunch shouldn’t just be a matter of boosting supply. “It should also be about making more efficient and equitable use of existing housing and housing-designated land,” according to Hal Pawson, a housing policy expert at the University of New South Wales.

The 2016 Census revealed that 11.2% (1,089,165) of dwellings across the country are vacant, slight uptick from the previous result of 10.2% (934,471). In Sydney and Melbourne, many properties are left vacant by foreign or local property investors.

Separate data from the Australian Bureau of Statistics also showed that vacant homes aren’t the only problem – more than a million homes had three or more spare bedrooms in 2013-2014.

According to Pawson the country’s tax system does nothing to discourage this waste. “It’s arguably encouraged by the “tax on mobility” constituted by stamp duty and the exemption of the family home from the pension assets test,” he said in an article published on The Conversation.

The housing policy expert called on the federal government to phase in a broad-based land tax similar to the one already introduced in ACT. Last March, Pawson said the initiative encourages owners to make the best use of land. “While land tax is already paid by investor landlords, expanding it to other landowners (including owner occupiers, who comprise about 60 per cent of the tax base) would deter speculative holding generally, and instead bring under-utilised land and housing to the market.”

“In this way, land tax helps drive the housing supply response that governments are so keen to trumpet as their main unaffordability solution,” he added.

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