Just plain unfair: the taxation of new housing

Pointless anyway?

If the inequity of this approach wasn’t bad enough, there’s the fact that it doesn’t even raise that much money. There are so few new dwellings relative to total stock (additions are made at only around 1% to 2% per annum) that the capacity of these levies to raise much relative to total council rates revenues is miniscule. The Gold Coast City Council, for example, collected almost $1 billion in revenues in 2010-11, of which roughly half was from general rates. Only $24.9 million came from ‘developer constributions’ which is piddling by comparison. Yet the effect of these levies, applied as they are to such a select section of the market, has been to stifle activity and depress the construction industry. They have a highly disproportionate effect on depressing new housing and on exacerbating the affordability problem.

The Gold Coast (continuing with this example) could abolish these levies altogether, which would add only $25million to the $500million general rates revenue needs of the council, meaning that the broader community will pay through their rates for the infrastructure they will enjoy, instead of assigning the burden to those least capable of paying.  And by abolishing the levies, they’d be making a significant step in the direction of approving affordability and stimulating the industry – both subjects which they’ve had much to say about.

A similar approach to more equitable taxation of housing, if adopted more broadly by governments state and local, might just achieve the sort of stimulus that wasted millions of grants and incentives have failed to deliver.

I wonder if anyone’s prepared to make the first step or even if anyone really cares?