Sam Duluk: There is no doubt that more work must be done on this reform package
As we seek to grow our economy and repair 16 years of Labor mismanagement, the stakes are too high for us to not get this reform right, writes Liberal MP Sam Duluk.
It is not often you will see a pro-business State Government championing tax policy that large parts of the business sector oppose.
While the proposed land-tax reform will hit some investors harder than others, it is fundamentally rooted in the conservative principle that lower taxes give us a competitive advantage so we can grow our economy.
Under the current rules, it is possible that an investor could hold 10 properties, each in different trusts, and, despite total holdings worth nearly $4 million, pay no land tax.
In proposing to amend the land-tax structure, the Government will collect a projected $40 million: So cue the dismay from large sections of the property industry.
But the proposed reforms will still result in a lower tax burden on South Australians.
The package will gradually bring down the top land-tax rate from 3.7 per cent to 2.9 per cent and increase the tax-free threshold from $391,000 to $450,000, effective July 1 next year.
This means, despite some investors paying more, the total Treasury land-tax grab will have decreased by 2022/23.
The reform will aim to unlock untapped investment potential in other parts of our economy, giving quiet and aspirational South Australians the means to grow their nest eggs and expand housing stock while they do so.
Nevertheless, broadbrush reform has never been easy, and the Government must consider its approach and proceed with caution. At the election we promised lower taxes.
And, even though the proposed reforms will result in a lower land-tax burden, it has justifiably left some unhappy.
Changing the rules without a clear pathway, or an understating that one size doesn’t fit all, may run the risk of hurting mum-and-dad investors and family-owned companies that use trust structures to source funding for property development, asset protection and job and wealth creation.
The 0.8 per cent decrease will cushion the blow, but by only fully coming into effect in 2027 it offers little relief for those who will be most impacted by any new aggregation rules. There is no doubt that more work must be done on this reform package and the State Government has committed to as much.
This must be include appropriate and meaningful consultation with the property sector, a sector that employs tens of thousands. If there is any scope in the budget to fast track these tax cuts, this must happen. The 2019/20 mid-year budget review presents an opportunity.
As we seek to grow our economy and repair 16 years of Labor mismanagement, the stakes are too high for us to not get this reform right in one of the state’s largest and most important sectors.
Sam Duluk is a State Liberal MP
