Land tax hikes announced by the Queensland government in June have been watered down following fears they could cause overseas investors to abandon development plans for the state.
The land tax absentee surcharge was raised from 1.5 to 2 percent in the Palasczuk government’s June budget and widened to include foreign companies and trusts, prompting fears of a mass exodus of foreign investors to other states around Australia.
Now the government has agreed in its mid-year fiscal and economic review to broaden exemptions on the increase to the surcharge, the Urban Developer reports.
The decision almost halves the $540 million windfall Queensland expected to reap from the tax increases over the next four years, part of a $1.47 billion tax and compliance package designed to help counter the state’s burgeoning budget deficit.
The revised tax framework will now match Victoria’s, with exemptions to apply to listed entities and some trusts, and to developments and operations deemed to make a significant economic contribution to the state.
Property Council Queensland executive director Chris Mountford told The Urban Developer the concessions were the result of a concerted mobilisation effort by the property industry, but the outcome was “still not ideal”.
“We continue to firmly hold the view that these types of taxes will only hinder the Queensland economy,” he said.
“Taxes on business and investment are ultimately taxes that will be borne by Queenslanders.”
When introducing the land tax amendments in June, which included a general 0.25 percent rise in land taxes for companies and trusts, state treasurer Jackie Trad said: “The government makes these land tax changes reluctantly”.
Blaming federal government cuts for funding shortfalls, she said: “If Canberra fixes the current bias in their GST calculations and returns what we are owed, we will repeal these land tax measures.”