QUEESLAND PROPOSED LAND TAXES

Given all the claims and counter claims, I thought it would be useful to more deeply examine that matter. We will look at it from a socioeconomic, political, emotive viewpoint, but we will also consider some legal implications.

Firstly, the Property Council is a lobby group, pure and simple and can reasonably be expected to behave as one.

Let us analyse their claim that rents will 'skyrocket' (meaning a rapid and sudden increase).

The average land tax is about $1500.00 p.a.

Average rent is $440.00 per week or $22880.00 p.a.

Negative gearing provides about 31.5% on average reducing the tax to about $1028.00.

So, in order to break even a lessor would need to increase rents by $20.00 p.w. (Interest rates are another matter, but not part of the Property Council rhetoric).

The principal place of residence (home) is not subject to taxes.

Also, increased rents are likely to benefit managing agents, as their commission is usually a percentage of the rent collected.

Secondly, many interstate properties are unlet and in any case the number of total residential properties owned by interstate investors appears not to be very substantial in number.

Many are unlet and others are let out to family for work or study purposes.

The tax may force some owners to let their properties, thus increasing the supply, which in simple terms may put downward pressure on rents, depending on volume and price bracket.

It may also discourage investors, thus benefiting first homeowners

Thirdly, politically, any new tax will be met with resistance from society in general, albeit society requires benefits but is not prepared to pay for them.

Fourthly, the High Court of Australia has been consistent over a number of years, from the 1930s to more recent times with tobacco taxes, that states cannot impose taxes on non-residents. In other words, quoting an old lecturer of mine, ' you can be bustards to your own people but not to those in other states'. And although, one cannot predict future judicial reasoning, it would be unlikely for the tax to bet up.

There can be further legal implications, but we need not consider these0

So, to conclude despite on one hand the hyperbole, and the possible economic benefits on the other, even if the tax were to be implemented, it may well have a limited life.