The State Government’s drastic land tax changes will cripple SA’s economy, business leaders warn
The backlash against the State Government’s contentious new land tax laws is worsening, with industry leaders warning it will make businesses and “mum and dad investors” abandon the state.
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Contentious new land tax laws combined with spiralling property re-evaluations are causing businesses and “mum-and-dad” investors to question their future in South Australia, industry leaders say.
Property developer John Culshaw, who owns Majestic Roof Garden Hotel and serviced apartments in North Adelaide, told The Advertiser the double blow was the greatest threat to the economy he had seen in 41 years.
“We don’t want to be forced to look outside SA, we want to be heard, we want positive action from the Government,” Mr Culshaw said.
The complex land tax changes, announced in last month’s State Budget, seek to prevent owners minimising tax by splitting properties between multiple legal structures, including trusts.
Mr Culshaw said the change’s threat to the property industry was immediate.
“We don’t have six months (to fix this), we have two weeks,” he said.
Urban Development Institute of Australia (SA) boss Pat Gerace said market confidence had taken a huge hit.
“It is exactly the opposite to a housing stimulus package,” he said.
“The Government’s lack of understanding of the property market and how developments are structured is going to threaten tens of thousands of construction jobs.”
Mr Culshaw said business owners must also be wary of pending Valuer-General property re-evaluations, citing an Unley business that had been handed a 125 per cent valuation increase, resulting in a council rates hike of 88 per cent.
“The re-evaluation process is out of control,” he said.
“It’s a rort. Councils are run by people who do not have experience of running a business.
“The Government has failed to manage the transitional process and it has been a perfect storm brewing if they don’t act immediately.”
Mr Culshaw said he remained positive about SA, and business and property owners had an obligation to pay tax, but the re-evaluations and land tax changes were killing the property market.
“Let’s move on and get confidence back in SA,” he said.
“The Government’s lack of action is creating anxiety in the market and if this is not acted upon quickly, the lack of confidence will cause the market to stall.”
Mr Culshaw has previously invested exclusively in SA and employs about 500 people. He is building 91 serviced apartments — M Suites — at the former Channel 9 headquarters in North Adelaide.
Real estate agent LJ Hooker (SA) managing director Andrew Friebe said investors might soon start dumping their properties on to the market.
“Buyers are gun-shy; they are unsure whether they are going to be stuck with tens of thousands of dollars of land tax,” he said. “We don’t need another burden at state level.”
Property Council SA executive director Daniel Gannon said the land tax changes were a state risk.
“Premier Steven Marshall promises to lower taxes but now he is increasing land taxes for thousands of ‘mum-and-dad’ and institutional property investors,” he said.
“If the Premier proceeds with these risky changes, the owner of three medium-priced properties structured through trusts will see their tax rise from $1100 to more than $20,000 a year.”