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Talk, Talk, Talk

31 Mar 15

The Real Estate Institute of South Australia (REISA) is drowning in tax discussion papers.

In February, the South Australian State Government released its tax review discussion paper and yesterday the Commonwealth Government joined the party.

While REISA is delighted that tax reform is high on government agendas around the country, it also fears that any constructive dialogue will be ultimately lost in a jurisdictional and party political talkfest.

The positions of most participants in this debate are already well known and another round of endless discussions will not advance the cause to any great degree.

Chief Executive Officer of REISA, Mr Greg Troughton said “REISA has been lobbying for some time that the State Government’s reliance on stamp duty and land tax as their chief source of revenue will always thwart investment, impede our competitiveness on the national stage and deny homeowners and buyers their proper role in the cycle of home ownership”.

“We welcome the Commonwealth Government’s release of their tax reform paper and their discussion of the relationship between State taxes such as stamp duty and land tax and the Goods and Services Tax (GST)”.

“However, we also note the seeming reluctance of the Commonwealth to pursue a tax reform agenda that has the lifting of the GST rate as its centrepiece”.

“What this means is that even if South Australia wanted to remove these inefficient State taxes, they would be forced to merely replace them with another - such as the mooted broad based land tax.  When property tax accounts for more than 25% of your overall revenue, you are unfortunately backed into a corner”.

“The resolution of the issue of property taxation needs a holistic approach.  We can look at raising thresholds, exempting groups and transactions or even introducing a broad based land tax but these are really only piecemeal solutions and will not fix the fundamental problem”. 

“What we need is wholesale tax reform.  Fifteen years ago, the advent of the GST heralded the beginning of the end of many inefficient State Government taxes.  However, inexplicably, the biggest and most inefficient State taxes remain.

“The time has come to seriously canvass the possibilities of either increasing the rate of GST or broadening the GST tax base.   Included in that discussion must be the acknowledgement that the most vulnerable in our society may need to be protected from such a measure and input as to how this can best be achieved either through exemptions or the social security system.  This has been done before and need not be an impediment to the final outcome”

“South Australia needs an efficient taxation source.  South Australia needs a revenue stream that does not come from the burdening of one industry.  And South Australians need to begin to feel confidence again in participating in the joys of home ownership”  

“Talking is fine, but let’s hurry up and start walking” Mr Troughton said.