The Palaszczuk government is being urged to reconsider the property tax increases that are planned for Queensland.
The government plans to introduce new land tax thresholds for aggregated land holdings that have unimproved value over $10 million.
The changes are due to come into effect on July 1 and will see individuals, companies and trusts subjected to a 25% increase in the rate of land tax. An increase of stamp duty surcharge of 3% to 7% for foreign investors buying residential property is also planned.
According to the Property Council, the tax hikes will create higher occupancy costs for businesses, an erosion of tax competitiveness, an increase of up to $1,000 on the cost of a new home, and devaluing of Queensland property assets by more than $1 billion.
According to Chris Mountford from the Property Council in Queensland, the increase in taxes will cost businesses money by increasing rents. It will also damage economic competitiveness, and will damage Queensland’s reputation as an investment destination.
Because many businesses lease premises that are owned by larger landholders, it’s likely they’ll see an increase in rents. In fact, for commercial tenants in the CBD, the new tax could result in a rental increase of between $1.50 and $8.50/m2 per annum, adding anywhere from $700 to $5,000 a year to their rent.
According to the Property Council, in comparison with other states, Queensland businesses are already paying a higher rate of land tax. For example, average current land tax on office in Brisbane is $21.39/m2, 18% higher than Melbourne’s $18.05/m2. Tax on retail in Queensland is $14.39/m2, 10% higher than Victoria.
As a result, the Property Council has called on the government to abandon the planned increases and instead, commit to review and modernise Queensland’s property tax framework. Time will tell.