My first instinct is “yes” but then I thought about it and I think it’s just going to exacerbate the short-stay problem unless combined with other measures.
My first instinct is “yes” but then I thought about it and I think it’s just going to exacerbate the short-stay problem unless combined with other measures.
Just tax land…
A flat land tax is a bit rough. Take some 80-year-old pensioner living in a simple house in suburbs. They’ve lived there for 60 years, only that suburb is now gentrified and a blanket 1% tax on the house is now a $10k/year tax bill they need to come up with (Just making up example of 1% of $1 Million property) just to stay in their own home.
This is a tough problem to figure out. I’m glad it isn’t my job. Whatever the solution is, I’m sure it’s more complicated that just blanket-taxing land. There’d need to be some exemptions to address this (which wouldn’t be that uncommon) and other scenarios I’m too dumb to think of. And whatever exemptions are applied, would naturally lead to people exploiting them as loopholes.
I think options to defer payment until sale of the house for people with low incomes would be worthwhile, but considering the massive benefit we give to pensioners who own their own home I don’t think it is unreasonable for some of that to be repaid from the sale of the house. If that same pensioner held a similar value of assets in any other form we would expect them to be fully self-funded and they would not see a cent of pension.
well, yeah. Because it’s the house they actually live in, not shares or stocks.
Why does being a house they live in mean it is not also an asset? If someone prefers to rent and save up more money towards their retirement instead of buying a house why should they be penalised? If someone wants to buy an inner city appartment that is worth less and have more money put aside to pay the body corporate fees why should they get less pension than if they have a freestanding house? If someone wants to sell their house, put that money aside while they travel in a van around Australia for a few years and then buy something suitable when it is time to settle down again, why should they lose their pension compared to someone who leaves the house mostly empty while they travel so it doesn’t count as an asset?
We definitely should have some consideration for the fact that this is someone’s house and they shouldn’t lose it because of unrealised capital gains, but we also shouldn’t be creating a two-tier system which also ties people in to keeping a house which may not be suitable for them any more.
Because the value is not immediately and readily accessible without uprooting their entire life.
Tax the shit outta the sale, sure but basically penalising someone for living in their own house opens up a lot of very bad doors.
That’s exacty what I’m arguing. A land tax which is able to be put off until the sale where people have low incomes. That would not penalise anyone, it just means some of the windfall gains from rising property prices go towards paying taxes rather than being a freebie to be passed on to the next generation as inheretance.
I’m no expert in this stuff, I shouldn’t be getting to involved in a discussion on the matter. I don’t entirely disagree with you, but houses are a bit different (and the ATO recognises this fact). As everyone is very (very) aware: 60 years ago, houses did not cost $1 Million. The simple 3x1 on a quarter acre was purchased for something like $30k. The owner paid if off diligently, paid all taxes owed from income through the years and the welfare system in place at the time assured citizens that there would be a pension at the end of their working life.
It is not this individual’s fault that most of the old houses in the street are long gone, that all those blocks were subdivided and that a quarter acre in Carlton North these days is worth $1 Million. They’ve never been rich. They don’t have any liquid wealth.
On the flip side, I agree that wealthy people pay a far smaller proportion of their income in tax than us mere mortals pay. Getting them to pay a similar proportion of tax is desirable. I’d love a solution to this problem. But, I don’t want that solution to hurt thousands of people in the spirit of being ‘fair’.
So what is your argument here, that people who got asset rich through no effort of their own should have that wealth protected so their kids can inherit as much as possible? Is it ok to tax someone if they worked hard to earn the money to buy a $1 million dollar home today, but if you got lucky in the past you should be tax exempt? Tying up your assets in your home already has some major tax benefits - it is exempt from capital gains tax, and barely counts towards the age pension.
Yes there need to be corresponding changes to allow for things like putting off the tax until the home is sold, but I don’t think we should rule out changes to the tax system because your hypothetical home owner didn’t intend to earn 970,000 profit when they bought their home. Perhaps we could also make a change so that this hypothetical pensioner could sell their quarter acre block and move into somewhere smaller that they can more easily maintain, freeing up some of that money so they can actually spend it, without losing most/all of their pension because the same wealth is now “liquid wealth”.
My argument is merely that a flat land tax is not as fair as it sounds on the face of it. There are issues with it - and if the intent is to replace stamp duty with a land tax, that’s a total non-starter for most of the country: since stamp duty has been privatised.
I’m certainly not qualified to produce a solution to the problem.
Fuck a flat land tax idea. On top of GST, Income Tax, Rates and interest (plus stamp duty), it’s just a money grab.
I mean like do you have an alternative to taxes? The whole point of this is you’d pay less after the switch.
Honestly, I’ve been on this rock long enough to know a new tax goes on the the rest don’t come off.