Since 2000 annual surveys have been carried out comparing State Land Tax (SLT) with local Council Land Tax Rates (CLR). The surveys involve all council areas in the Sydney region, and all coastal councils from Bega to the Tweed.
Why compare State Land Tax (SLT) with Council Land Tax Rates (CLR)?
Both are land taxes imposed on liable land by the Valuer General (VG), who applies exactly the same valuation methodology to both. These valuations are called statutory valuations because that require the VG to set land values that reflects the land redevelopment value of liable land. This valuation methodology was intended for Local Government Areas [LGA] to set their Valuation roles.
To impose CLR or SLT on redevelopment value of land is, in most council areas, taxing the potential development of all liable land. Re-development that may not occur in 50 years.
The intent of this valuation methodology is to be transparently open and fair, seeking to equitably distribute the funding of a council among its ratepayers. This is done by setting all land values from a common base: vacant and all at same date.
Councils are bound apply the same land tax ‘Rate’ to all land in the same class.
State Government Exploitation
The State Government ruthlessly exploited valuation methodology to impose SLT agenda. Freehold land is targeted, especially exclusively for Rental Housing and Small business that requires a freehold site done exploiting the valuation methodology that taxes redevelopment value ,ignoring existing use.
The proof of this is found in almost every LGA especially in Sydney established LGAs. We have logged the sale of numerous blocks exclusively rental, forced to strata title by SLT. Just recently a block of 12 rental apartments was sold in the Waverley area because SLT was consuming 22% of gross rental. Sold as Strata apartments it raised almost $800,000 in stamp duty.
The annual surveys expose the determination of the State Government to undermine freehold land used as rental housing and for small business
Example 2008–09
Some council areas where State Land Tax EXCEEDS Council Land Rates expressed as a %
North Sydney – SLT exceeds Residential rate by 2177%
Hornsby – SLT exceeds Residential rate by 1223%
Fairfield – SLT exceeds Residential rate by 1046%
Strathfield – SLT exceeds Residential rate by 1532%
Summary
The comparative surveys expose how unpegged SLT agenda is to impact freehold land used as either rental housing, or small business.
It is my opinion the call by some to unpegged CLR cannot be implemented unless SLT is withdrawn or significantly altered. If SLT was not withdrawn then the impact of two un-pegged land taxes will certainly undermine existing use of freehold land as we know it, unleashing a dual land tax agenda that has the real potential to undermine the existing use of all freehold land—including the family home—to promote stacked strata housing.
The State Government’s Land Tax Agenda to target privately-funded rental housing and small business exposes the hypocrisy of government at all levels with their feigned concern about a rental housing crises and concern for small business. The hypocrisy is breathtaking.