THE way land tax is applied in Tasmania is a financial mystery; in need of reform.
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It is the closest governments will get to a wealth tax but it raises less than 10 per cent of all state taxes.
About 64,000 properties are taxed, including business properties, shacks and rental properties, but almost 160,000 properties are exempt.
The exemptions include land for principal residence, primary production, religious purposes, medical establishment, Aboriginal activities, retirement villages, conservation areas and charitable institutions.
Land tax raises only $89 million a year.
It could raise twice that amount, but of course governments are too scared to raise the rates or ditch any exemptions.
Murchison independent MLC Ruth Forrest wants land tax broadened in order to spread the burden and reduce the rates.
Land tax applies to land values, not buildings, and exempts property with a value up to $25,000.
Higher valued land is taxed according to its assessed value.
Less than 6000 properties are taxed at the highest rate.
Clearly there should be a debate.
It is a wealth tax and should reflect the intention.
Some of the exemptions are curious and debatable.
If the criteria includes whereacommercial return is derived, it should apply to high end rural properties according to wealth production.
No government will ever apply land tax to the principal residence but it is a debate Tasmanians ought to have.
We tax the family car, the family holiday, the family bread winners, the family food, the family superannuation (and that’s double taxation) but for some reason the family’s principal residence is exempt.
It could be a mansion worth a cool $6 million, but it is exempt.
Aside from the principal residence, there’s plenty of scope for reform.
The last time the state political parties considered taxation reform the bipartisan effort failed on political grounds.
Land tax need not be a slave for revenue but it could be more efficient and equitable.