A reasoned counter-view to the wails of negativity coming from Right-wing and moneyed interests.
Land and windfall tax hikes could reduce corruption, economist says
Victoria’s much-maligned property tax hikes, announced as part of the latest Victorian budget, could actually boost economic growth and put an end to development-related corruption, an economist from the Grattan Institute has said.
Despite backlash from property industry groups who argue that raising land tax for wealthy investors, and introducing a windfall tax for those whose land is rezoned for development will torpedo the state’s economic recovery, Brendan Coates believes it will have the opposite effect.
“It’s a misnomer that every Victorian investor and renter will be worse off because of the taxes,” Mr Coates, the Grattan Institute household finances program director, said.
“My view is that two out of the three tax increases are steps towards a more efficient tax system. I genuinely believe it’s a step in the right direction.”
Mr Coates said the rise in land tax for those with investments between $1.8 million and over and a 50 per cent windfall tax for profits on rezoned land of $500,000 or more would help Victoria out of the economic doldrums caused by COVID-19.
“At the moment, the land-owner captures the entire gain when land is rezoned for something like an apartment development — that’s an enormous windfall that doesn’t come back to the community,” Mr Coates said. “If you rezoned something like Fisherman’s Bend today, hundreds of millions of dollars in revenue would come back in taxes to help build schools and hospitals across the state.”
Mum and dad investors made up most of the landlords across the country, and owned properties worth way less than $1.8 million, Mr Coates said, so not many investors would be affected by the new land tax.
