Perrottet leads states’ revolt against Queensland’s cross-border property tax grab

A string of states have joined forces to hobble a Queensland land tax plan that has been widely branded as inappropriate.

Well, that didn’t take long! NSW Premier Dominic Perrottet has thrown a spanner in the works for Queensland’s poorly conceived attempt to collect revenue from interstate property investors.

By very publicly withholding investor data from the Queensland government, Perrottet is instantly undermining one of the nastiest moves in property tax for some time. And according to the Property Council of Australia, NSW will soon be supported by South Australia, Tasmania and the Northern Territory

Queensland has planned that investors in the state holding property outside Queensland will have that land assessed as part of any Queensland land tax.

NSW has raised the issue of the tax’s constitutionality, though at first glance this may not be a problem. Professor Luke Beck from Monash University’s law faculty has told The Australian that the way it has been designed the measure is not taxing property in other state and as such it does not conflict with section 117 of the constitution.

NSW Premier Dominic Perrottet. Picture: Monique Harmer

But there is still a risk other states may try to do the same thing, particularly Victoria, where there have already been fresh ­efforts to pinch property ­investors.

Keep in mind that it is only 15 months since the Victorian government caught ­investors by surprise with state budget changes that included a lift in stamp duty of 18 per cent and an increase in land tax of 13 per cent.

At the very least, the public move by Perrottet to brand the Queensland tax plan as “lazy” means other states will now be cautious in following behind the Queensland proposal.

The Queensland tax had already hit wide criticism – it was ­instantly condemned by the Queensland state branch of the Tax Institute as possibly costing more than it would ever raise.

The vast majority of rental stock in the residential market is held by private investors. Queensland is at present the most popular interstate market for investors, but it is by no means the most lucrative – the main reason that interstate investors invest in the state is affordability. Average property prices remain well below those of NSW or Victoria.

Queensland Treasurer Cameron Dick. Picture: Sarah Marshall

However, the state is already starting to show a decline in home prices, which may only beginning.

Worse still, there is an exceptionally tight rental market in all the major cities – and Brisbane has the worst rental crisis in the nation. The most recent reported rental vacancy rate in the city is less than 1 per cent.

Having launched a tax that shows every sign of falling at the first post, Queensland Treasurer Cameron Dick has resorted to the political strategy of doubling down.

Dick continues to describe the tax issue as a loophole that needs to be closed and warns that investors who avoid the tax face fines of 75 per cent of the default tax ­assessment.

The risk for Queensland is not that the investors will avoid the tax, the risk is that they will avoid Queensland.

Originally published as Perrottet leads states’ revolt against Queensland’s cross-border property tax grab