Rob Lucas rejects Property Council idea of flat land tax rate on all property

Treasurer Rob Lucas and former staffer and Property Council SA executive director Daniel Gannon have clashed again, this time over a bold idea to charge every property owner a flat rate of land tax.

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A bold proposal to replace the state’s progressive land tax system with a flat rate charged on every residential and commercial property in the state has been rejected by the State Government as an attack on “mum and dad investors”.

In its submission to a public consultation on controversial land tax changes, the Property Council argues a flat rate charged on every property would simplify the tax system, improve competitiveness and deliver certainty for property owners.

By eliminating the tax-free threshold, 213,000 property owners currently exempt from land tax would be liable under the proposal, while principal places of residence could also be hit.

Treasurer Rob Lucas.

Property Council SA Executive Director Daniel Gannon.

Treasurer Rob Lucas labelled it a “crazy proposal” that would “smash the budgets” of many South Australian households.

“The Property Council believes that the land tax base should be broadened by ensuring many more mum and dad landowners have to pay land tax whilst reducing the amount of land tax their Property Council members would have to pay,” he said.

“The real intentions of the Property Council and its supporters have now been starkly revealed by their submission.

“Whilst they have every right to advocate on behalf of their members and self interest, their claim to represent mum and dad investors was always a nonsense and a cover for their real plans.

“The fact that the Property Council believe that the impact ... for at least 213,000 mum and dad investors would be ‘small’ shows how out of touch the Property Council and its supporters are on land tax reform.”

According to the Property Council’s submission, a broad-based land tax rate of 0.58 per cent would deliver the State Government the same revenue as the current regime.

The State Government’s land tax proposals include a reduction to the top rate from 3.7 per cent to 2.4 per cent for landholdings valued in excess of $1.098 million.

“Removing the progressive structure of the land tax system would cause the biggest gains to be realised by current owners of high-value land ownings, while losses would accrue to owners of properties currently valued below the tax free threshold,” the Property Council submission says.

“While the base of a flat tax would be far broader, the impact on each individual landowner would likely be small in absolute terms.”

Property Council SA executive director Daniel Gannon said the State Government’s current proposals would result in fewer investors paying more in land tax.

“That’s not a fair system - it will only place further pressure on small and big property owners to fill the tax hole,” he said.

“A discussion about a broader land tax base and flatter rates is sensible, but it seems the Treasurer only wants to mock policy options rather than consider them.

“In doing so, he’s making a mockery of his own consultation process.

“This particular example shows how competitive South Australia’s investment environment could become if our rate was lowered to this extent.”

Mr Gannon said an alternative flat rate system, which retained the exemption for principal places of residence, would still achieve a broader tax base.

In its submission, the Property Council also calls for land tax reform to be delayed until the completion of a statewide revaluation program, for existing land tax arrangements to be grandfathered and for further cuts to land tax rates.

Mr Lucas said 190 submissions had been lodged as part of the land tax consultation process, with the legislation due to be introduced into parliament next week.