When you hear the words “quietly” and tax in the same sentence you know what you are about to hear is going to be bad! And that is exactly what has happened in the last 24hrs in NSW politics and the real estate industry.
Yesterday Premier Keneally quietly introduced a new property tax, being referred to as a land transfer charge. The front page Sydney Morning Herald article today estimates it will “boost the state government coffers by an estimated $90mil annually.”
The new land transfer charge is a buyer’s tax and will be charged on the sale of residential and commercial property worth more than $500,000. Charged at a rate of 0.2% of a sale between $500,000 and $1mil, over $1mil the charge rises to 0.25% for the portion over $1mil. Therefore on $600,000 which is currently the Sydney median house price, the charge is $200, on $1mil, the charge is $1000.
Back in September 2008 I wrote a blog about the NSW state government and how their stamp duty real estate cash cow was drying up due to the Global Financial Crisis and lack of property sales. At that time the state government reliance on stamp duty revenue as a percentage of total tax revenue was a whopping 20%. The government was crying poor in September 2008 because due to poor economic conditions, less people were buying and selling, the state government was behind in stamp duty revenue by $180mil for the months of July, 2008 and August 2008 alone!
As the housing market starts to recover Premier Kenneally has decided to milk the cow again with another slug at the property market. As if we aren’t contributing enough as it is.
Premier Keneally apparently defended the tax by saying 70% of property transactions would not be affected, hello???! The median house price in Sydney is $600,000. In an article on www.smh.com.au today, the Real Estate Institute of NSW provided these statistics – “Of the 50 local government areas in Sydney, 34 have average house prices in excess of 500,000”.
Even more ridiculous is the Minister for Lands, Tony Kelly, explaining the new tax as part of a strategy to prevent property fraud? Do they think we are that stupid? Like that is a good enough excuse to waste another $90mil of our money?
Let’s just say what this is really about, the NSW state government is bankrupt, desperate and we may as well compare ourselves to the Greek economy because if they are desperate enough to “quietly” under the cover of the federal budget announcements introduce a new property tax things must be really, really, Greek economy style bad!
Apparently there are 35 fraudulent property transactions currently being investigated and what $90mil is needed for that?
Keneally, I thought you were doing ok till now, I mean the state was a mess when you took over but you have lost me completely with this one.