Steven Marshall to wield land-tax axe to attract property investors

An across-the-board reduction in land tax is a bid to attract more property investors to SA.

SA Premier Steven Marshall. Picture: Kelly Barnes

South Australia will fast-track an across-the-board reduction in land tax in a bid to attract more property investors and put pressure on the Queensland Labor government over its tax hikes.

The move will also help Premier Steven Marshall’s Liberals end their war with cashed-up property investors, party donors and key industry groups over a crackdown on tax-minimisation schemes.

In the June state budget, the government changed land-tax rules to prevent investors from bundling their properties into trusts to reduce land-tax bills.

The Australian can reveal that next week Mr Marshall will announc­e a fast-tracked reduc­tion in the maximum rate of land tax in a bid to seize control of the debate and provide immediate relief­ to investors.

However, the SA Property Council is yet to be convinced the modified plan will do enough to satisfy investor anger.

In the budget, the government flagged plans to reduce the top rate of land tax from 3.7 per cent to 2.9 per cent by 2027-28.

The Australianunderstands the government will now bring that reduction forward to as early as next year, and is also considering driving down the top land-tax rate below the 2.75 per cent propose­d in Queensland.

However, it will retain its ­aggregation policy, which prevents investors from using trusts and other entities to spread out the value of their holdings, saving the budget $40m a year.

Liberal MPs spent two days at a Barossa Valley wine resort “love-in” this week, where Mr Marshall outlined his new land-tax proposals to his team.

 

While revealing none of the details of his compromise, the Premier said he had been thinking through his final plan and it could differ from what was outlined in June.

“Early next week, I will go out with the position that will further improve the competitiveness of SA,” Mr Marshall told The Aust­ralianon Thursday.

“We have ­already removed stamp duty on all commercial and industrial transactions in SA and what we will finalise in terms of land tax will be a further reduction.

“We are intent on aggregation but we also accept that our land-tax rates are far too high. I am ­absolutely obsessed with making SA a more attractive investment destination.”

The aggregation model proposed by the government is ­already in place in NSW, Victoria and Queensland; its absence in South Australia has created haves and have-nots within the investor community.

The vast majority of investment properties in the state — about 22,500 — are aggregated, with 4500 using trusts to reduce tax burdens, and these are the investors­ furious at the changes.

Property Council SA executive director Daniel Gannon said the existing land-tax arrangements were “an anti-competitive regime that discourages investment and pinches pennies from mum-and-dad and institutional property invest­ors”.

Any reductions in the top rate would be negligible if the aggregation policy was not ditched, he said.

“While the state government’s appetite to water down its initial budget measure would be welcomed, there are too many demons associated with aggregation to simply let that slip through.

“Aggregation needs to be rescinde­d to deliver on the Premier’s election promise of lowering land tax and avoid taking a sledgehammer to business, jobs, mum-and-dad and nest-egg investors, and the state’s investment attractiveness.”

Mr Gannon said the added problem for the SA property ­market was that the state Valuer-General was currently under­taking a statewide property revaluation.