It’s not very often that New South Wales, Australia’s most populous state, gets something new.
And even when it does, new doesn’t necessarily equal good news. Such is the case for the additional property tax announced in the new Federal Budget.
The tax will be:
* 0.2% on properties above $500,000 and
* 0.25% on properties over $1,000,000.
This means a property purchased at say $650,000 will attract an extra tax of $300, while a property with purchase price of $1.25m will incur tax of $1,875.
Whether it was “slipped in” by stealth at the same time as the Federal Budget for 2010 was released, is unfortunately neither here nor there. What is of primary concern is that it is being introduced during less than favourable times and is a complete slap in the face of the recently released Henry Review, the review of Australia’s taxation system.
To take effect in July, this is at the same time as a new hike in electricity prices, there is already a poor investment climate, a 50 year low in construction levels, and the median house price has risen to $600,000.
The tax will effect approximately 30% of all property purchasers, is on top of the existing stamp duty – which is little more than a revenue raiser that distorts the property market – and is part of a bid by the state government to raise up to $100 million per year.