What do governments do when they decide they need to raise a bit of revenue?
They introduce a new tax.
And if it’s a Government in Australia we all know what that means – another property tax.
It’s the Victorian Government this time, which has introduced yet another new tax on the housing industry.
Another impost which just makes the cost of new housing even more expensive for the end use – which often means first-home buyers.
State governments just can’t seem to help themselves.
Even though it has been proven time and again – as recently as late last year at the Federal Government’s Inquiry into Housing Affordability – that half the cost of new house and land packages is made up of taxes, fees and levies, from all three levels of Government, but state governments in particular.
We’ve had many of these inquiries over the years and they all discover the same thing, that government imposts are the biggest cause of expensive housing.
But, unfortunately, politicians aren’t prepared to cut taxes to fix it.
Instead, they seek to point the finger of blame somewhere else.
The government will say it isn’t taxing home buyers, it’s taxing greedy developers, but ultimately that’s not really the case.
It’s really a tax on first-home buyers, because it adds to the costs of creating new homes and that always flows through to the end consumer.
You can’t sell a house and land package for $400,000 if it costs $500,000 to create it, with roughly half of that cost being taxes, fee and charges from government.
All Governments across Australia are culpable in this, but I’d have to say the Victorian Government is the worst offender.
It regularly lumps new taxes on the housing industry and it has by far the highest stamp duty charges in the nation.
Anyone who buys the average house in Victoria pays three times as much stamp duty as the typical house buyer in Queensland.
This explains why new research shows that more and more Melbourne residents are moving to Brisbane and other parts of Queensland, where the houses are cheaper and the taxes are lower.
This time the Victoria State Government plans to raise $800 million a year from a new tax on housing developments which it will use to fund social housing. They’re robbing Peter to pay Paul.
Sort of ironic isn’t it that they will increase the cost of housing by adding a new tax, which means first home buyers are less able to afford housing, so they need to be provided with social housing, which the new tax is paying for.
If you’re mystified at the logic of this, it’s because it doesn’t make sense.
The new levy which will be introduced is a 1.75% payment based on the end value of all newly built developments of three dwellings or more.
This, the Victorian Government believes, will help them pay for 1,700 new social and affordable homes each year.
While the Government might like to call it a levy, the Urban Development Institute of Australia has come out and called it exactly what it is – a tax on new home buyers.
It estimates it will add around $10,000 to the cost of a $500,000 house-and-land package.
Ultimately it’s not the developers who will be financially impacted by these changes.
It’s just another huge hurdle that first-home buyers have to jump over, thanks to politicians who claim they care about housing affordability but who continually make decisions that make it worse.
