Housing a big income earner for government

Housing a big income earner for government

Posted on Thursday, May 09 2013 at 11:26 AM

Nearly half of all tax revenue collected by state and local governments in the 2011-12 financial year came from the housing sector.

That incredible cash grab came at a time
when most property markets were in the midst of dramatically weaker conditions.

New analysis by research house RP Data
found property taxes accounted for 46 per cent of all income in 2011-12.

While that figure was down from 47.2 per
cent in the previous financial year, the total amount of housing-related taxes
actually increased by 0.9 per cent in 2011-12.

RP Data researcher Cameron Kusher says it’s
curious governments could rake in more property tax during a period when sales
volumes and house prices were down sharply.

“Our data shows the total value of dwelling
sales across the country fell by 6.1 per cent over the year and, despite this,
property taxes increased. To add to this, the combined capital city home values
fell by 3.6 per cent (in 2011-12) and the annual number of home sales was down
6.1 per cent.”

The two largest sources of revenue were
municipal rates (39.6 per cent) and stamp duties on conveyances (34.8 per

It’s clear the only possible way state and
local governments could increase property tax revenue was to increase rates.

During 2011-12, municipal rates revenue
rose by 6.1 per cent and land tax revenue rose by 1.6 per cent, while stamp
duty income fell 4.7 per cent.

“While there have been many calls to dump
stamp duty and change it to a broad-based land tax, it appears that neither
side of politics is seriously considering the change, which would most likely
be fairly unpopular with voters.”

Kusher says property tax is obviously the
most important source of revenue for state and local governments across the
country and it is therefore important for governments to find ways to grow
revenue over time or look for other ways to create it.

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