Property taxes still soar amid housing downturn

By Gerv Tacadena

Revenues from property taxes remain high in 2017-2018 despite housing housing downturn.

Property taxes have managed to fill local and state government coffers significantly over the past financial year despite the ongoing housing downturn, new data shows.

According to the Australian Bureau of Statistics (ABS), governments collected $30.29bn worth of property tax revenue for FY2017-2018, 5.6% higher than last year.

It is important to take note that this figure does not include revenues on stamp duties, which have been moved to a different section — taxes on the provision of goods and services.

Of the total property tax revenues, land taxes accounted for $9.15bn, reflecting an increase of 9%. Municipal rates made up more than half of the overall property tax revenue at $18.45bn, a 4.3% jump from last year. Other tax as part of the total value also increased, hitting $2.69bn.

CoreLogic research analyst Cameron Kusher said revenues from property taxes are now the highest in the most populous states. The table below shows how much each state earned:

Australian State

Property Tax Revenue

New South Wales

$8.38bn

Victoria

$8.78bn

Queensland

$6.66bn

South Australia

$2.43bn

Western Australia

$3.65bn

Tasmania

$549m

Northern Territory

$133m

The Australian Capital Territory

$705m

According to ABS figures, stamp duties saw a marginal increase last year, reaching $21.7bn.

"When the housing market is seeing increased transactions and rises in values, stamp duty generally rises and vice versa. The national housing market started to see values fall late in 2017 and as a result, stamp duty revenue is largely unchanged in 2017-18 from the previous year," Kusher said.

Also Read: Here's why governments are reluctant slash stamp duty

It is expected that revenues from stamp duties will moderate over the year as housing values continue their downtrend.

Kusher said transactional-based stamp duty is much less guaranteed and harder to forecast for budgeting purposes than non-transactional based property taxes, which provide consistent revenue streams for both state and local governments. 

"With the NSW and Vic governments seemingly going to be hit by a loss of stamp duty revenue over the coming years it would seem that now is as good a time as ever to look to move away from this transactional tax," he said.

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