The Real Estate Institute of the Northern Territory (REINT) is concerned by the Northern Territory government’s interest in introducing a land tax.
According to Quentin Kilian, CEO of REINT, a land tax would impact every Territorian, “not just those that own property”.
Renters would be impacted as landlords may try to pass on the tax via higher rents. Commercial tenants and retailers would also be impacted, as their landlords may seek to bypass the tax via increased outgoing costs—and that would include all the space currently being rented by government offices.
Elderly people, and those on low or fixed incomes, would be impacted if a tax of 0.5% is imposed on the current Darwin City UCV. “The average additional tax bill – every year – would be around $1,825,” the REINT said.
Small businesses would also feel the heat, as land taxes have been proven to impact on their cash flows and borrowing capacities, meaning “less investment into their businesses.”
“And bear in mind that the government’s discussion paper on this new taxation regime indicated that if a land tax were to be introduced it would be in addition to, not in place of, stamp duty,” Kilian said. “So a person purchasing property in the Territory would be hit twice for taxation.”
In its submission to the Northern Territory Revenue Discussion Paper, the REINT said the imposition of a new tax regime, or increased taxation affecting the property market, is particularly ill-timed at present, given the fragile state of the property market, especially in Greater Darwin.
“There is empirical evidence from markets such as New Zealand that have shown a 1 percent land tax led to a fall in land values of 16.7 percent,” Kilian said.
“The REINT feels that any additional tax measures applied to this fragile property market will have highly detrimental and long term impacts, even to the point that they could increase the population decline. We are therefore calling on the government to absolutely rule out the introduction of a land tax for the Northern Territory in the next budget.”
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