Private Members’ Statement
Mr ANOULACK CHANTHIVONG (Macquarie Fields) (18:38): — I offer part two of my analysis of the Treasurer's never‑ending tax on the family home, politically spun as stamp duty reform that promises to deliver every economic benefit under the sun except for the truth.
The never‑ending annual tax on the family home can, and almost certainly will, result in higher property prices and make it even harder for young aspiring home owners to enter the market.
The best way to deal with a snake oil salesman is to expose their scam to scientific analysis.
Most people probably would rent and try to save some money to buy a property.
Let us analyse how that plays out for renters who are trying to save money for their first home in East Hills.
We will call our aspiring home owner "Scotty". Scotty works in marketing and is renting while trying to save a deposit to buy a home.
Under the never‑ending land tax on the family home proposal, investors are liable to pay $1,500 annually plus 1 per cent on the unimproved land value.
For investors, the ideal land‑to‑value ratio sits somewhere between 50 per cent and 70 per cent. That is, if a property is worth a million bucks, the land on its own is worth somewhere between $500,000 and $700,000. A fair measure is about 60 per cent.
SQM Research property data shows rent for a three‑bedroom house in East Hills is about $567 per week. The average house price in East Hills is about $1.036 million, but I will round it down to $1 million for analytical purposes.
An investor has the option of paying $40,000 up‑front in stamp duty costs on a $1 million house in East Hills, which I understand is not tax deductible.
Alternatively, they can choose the Treasurer's snake oil—the never‑ending annual land tax on the family home option.
For an investment property in East Hills, that equates to $1,500 plus 1 per cent of the unimproved land value of $600,000, or $6,000 per year, equating to $7,500 in total.
The annual $7,500 tax bill is an ongoing operating expense that would be tax deductible on the investor's annual income as stated in the consultation paper.
The investor—in this case Scotty's landlord—chooses the Treasurer's snake‑oil option.
The landlord will avoid the up‑front capital cost, will get a deduction on their annual income and, of course, will pass on the $7,500 annual land tax bill through higher rent, which equates to $144 a week—a triple benefit for the investor who would always ride on the horse called "Financial Self-interest".
Here it gets tricky for Scotty from marketing, who is struggling to save for his deposit. He will now bear the brunt of the Treasurer's never‑ending annual tax on the family home.
As I said, rent for the three‑bedroom house in East Hills is $567, but I will round that down to $550.
To recoup his land tax bill, the landlord raises Scotty's rent by $144 per week.
Scotty now has to pay $694 per week in rent—a staggering 26 per cent increase.
I will be conservative and say that Scotty's landlord is benevolent and decides to pass on only 75 per cent of the land tax bill to his struggling renter.
Scotty's rent goes up by 20 per cent or $108 a week.
To be even more conservative, I will say that Scotty's landlord is super generous in only passing on half of the land tax bill, which is $72.
Scotty's rent has just gone up by 13 per cent to $622 per week.
However conservative the analysis, the weekly rent in East Hills and everywhere else is going only one way, and that is up. There goes Scotty's deposit for a new home!
The increase in rent will reduce an aspiring home owner's ability to save, making it even harder for them to enter the property market.
If the Treasurer is so confident that property prices and rents will not increase under his never‑ending annual tax on the family home, I challenge him to put it in writing and stake his job on it.
The Treasurer is right when he says that his snake‑oil annual land tax on the family home is the Netflix of property tax because people can be assured that every year an increasing land tax bill will be streaming into their letterbox along with higher rents. But unlike with Netflix, they will not be able to unsubscribe.
This is the Goulburn SuperMax of bad taxes: Once a person is in, there is no room to move and no way to escape.
They are locked in to pay a tax on their family home forever.
As we all know, this Treasurer always talks the big reform game, but he could not even deliver the Fire and Emergency Services Levy.
He will end up surpassing a former Liberal Treasurer and will be known as being neither the tip nor the iceberg when it comes to political conviction.
Members should stay tuned: My evidence‑based analysis on this never‑ending tax on the family is to be continued.