A GOVERNMENT THAT NEEDS TO RELAX IT’S RADICAL TAX !!

A GOVERNMENT THAT NEEDS TO RELAX IT’S RADICAL TAX !!

The housing affordability debate has been brewing for some considerable time now although it is not only the housing market that is in crisis. You can also throw in hospitals, education, transport, infrastructure and more importantly a gross lack of economic management.

At the other end of the spectrum, business people who know a thing or two about a balance sheet, drove the stock market to all time record levels this week thanks to stronger banking and mining stocks. Quite a turnaround given that it took exactly two months for the global credit crisis fears to be cast aside and our stock market now finds itself in record breaking territory. It is no coincidence that the players in these financial markets are driving top – end property markets in the very same direction. Remember the antiquated mindset that constantly promoted that “property bubble” which was going to burst? It now appears to be a distant memory! Yes, some bubbles came back to terra firma at an alarming speed. It’s just that those in the bubble are from a totally different financial demographic.

If an individuals income tax is assessed on earnings then why does this formula not apply to Stamp Duty in NSW. The current Stamp Duty rate in NSW was set back in 1986 when just a few homes were valued in excess of $1,000,000. Twenty plus years on, all that we have seen is that in NSW, Stamp Duty jumps to seven per cent for property transactions in excess of $3,000,000. The NSW State Government does not offer any warranty to the record levels of home buyers in default today. Just like the stock market, which is at record levels where players also pay record-high Stamp Duty. The NSW government has confused a sliding scale with a sliding economy that is today deeply marinated in recession. Stamp Duty on property acquisitions in NSW remains “numero uno” in the unpopular tax stakes followed by Land Tax. Even though in 2000, when the current Federal Government introduced GST aka, Governments Save Taxes, they promised to reduce these taxes, yet today, we have seen them increase. With the benefit of hindsight, voters would be in chorus that the introduction of GST has been to their detriment.

The blank canvas of NSW politics, Morrie “I’m sorry”, told a housing industry association breakfast meeting this week that State Government levies are being reviewed. “Thanks, for the invite but our eggs are well and truly scrambled.” Maybe he would have been better served, doing a Google search on the Housing Industry Association paper, delivered back in July 2003 – Restoring Housing Affordability – the housing industry’s perspective. Yep – four years on the industry was spot on and all sides of Governments are guilty for our current positioning. The National President’s Foreword by Peter Grigg tabled, “Housing ownership in Australia is at crossroads” (sound familiar). “In titling this report, Restoring Housing Affordability, Housing Industry Authority (HIA) has recognised a very real challenge that is facing Australia. House prices are being inflated on two fronts; by indirect taxes and by land shortages.” This 2003 report identified “there are more than 20 different state and local government indirect taxes and levies applied to a new house and land package, public transport levies (when did that work last), local council contributions and fees for community facilities, major roads, drainage and open space. These indirect taxes on new housing tend to be embedded in the development process so that most consumers don’t even know that they are paying them.”

Back then (2003) indirect taxes delivered almost $11 billion to state and local governments where today it is nearing $15 billion. So cast your minds back to those who have lost their homes. The ongoing collapse of hospitals, education, transport and infrastructure simply equate to governmental mismanagement. So much for giving and receiving, adjust that with giving and deceiving.

Then again, in NSW, when you employ people you also get fined by way of Payroll Tax. Every year businesses adjust, modify business plans and implement new strategies. Sadly, the same can’t be said for our elected governments and many suggest that these ‘blank canvases’ are unemployable. The significant difference is that they don’t lose their homes as a result of wrong decisions – which is the case for many small businesses.

Sadly today, housing affordability equates to “Governments Saving Taxes” when the initial mandate “Good Sense Taxation”. A national disgrace, but the pollies will tell you differently _ this equates to the price of trust. Quite amazing that the real estate industry identified the modern day problem of housing affordability years ago, yet the powers that be struggle to identify this taxing problem.

Employment levels are today at a 33 year low – throw our politicians in and watch the rate rise !! Cheers ^__^

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