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.
35 Comments
Greg Vincent
Kylie they have lost the plot……35 out of about 200,000 transactions in a year. Tony Kelly should be looking closer to home for the biggest rip-off in the property industry ‘Stamp Duty’. I am sick and tired of leadership changes within this government which are used to make people think that they are a different government. They have all lined up behind each pathetic leader and voted in every single bad policy decision affecting our state and they just keep changing the leader to see if they can pull the wool over the eyes of the voters. This time I hope they don’t get away with it.
Add this decision to the stupid new tenancy laws theFair Trading are looking to impose in NSW and investors will be heading out of NSW again in droves.
Will these people ever learn? Don’t they remember the exit tax they all stupidly voted in?
As opposition leader Barry O’Farrell said “”This is a tax that will hurt the State Government because a property market that is not buoyant does not produce the revenue that the Government uses in so many other areas of its administration.”
Bring on the state election…
Robert Simeon
Ahhhh – Fort Crumble! Australia’s most embarrassing and hopeless government in history. They say the swing against them at next year’s election will qualify for the Guinness World Records – Largest Swing against a government. You are right about the bankruptcy which unites within their entire party bankrupt mentally and physically.
Kylie Emans
Greg, I was going to mention the 2004 exit tax debacle but I totally forgot to put that in as I was so worked up this morning. That killed the real estate market overnight. How long did that last again? This new tax takes affect 1st July, hopefully these jokers won’t last too much longer.
Brian Chua
This ‘sneaky’ move will definitely push up the standard of living in Sydney as well as increasing the cost of purchasing a property. This is bad news for NSW residents. I wonder if this tax will depressed the property market?
Greg Vincent
I wouldn’t necessarily compare them to Greece because most of the Greeks I know are very good at managing money. The NSW Labour Party couldn’t run a chook raffle properly.
Property prices have soared across Australia (including New South Wales) and since Stamp Duty is based on a percentage of the sale price surely they have seen a huge increase in Stamp Duty of late. Now they want to kill-off the Golden Goose once again. Very clever. Not!!!
Kylie Emans
Robert, I think it should be Fort Crumbled! It is all over for NSW, we are history as long as we continue to produce, year after year, the worst politicians, seriously why can’t NSW attract some talent, and what is Barry O Farrell doing? That he uses the words “sneaky” to describe the governments actions? Is that all he can come up with???
Andrew Blaxland
Unbelievable… No, believable really. I supposse we needed a stamp duty on the stamp duty! A bit like the gst on the bridge toll.
Yes the next State election will be written clearly in the history books.. sorry the Guiness books, as Robert Simeon suggests.
Kylie Emans
Greg, just to be clear I am only talking about the Greek economy, that is receiving the biggest bailout in history, the NSW government is going to need a miracle like that to save us. As they tax buyers away maybe they will have time to investigate how they have wasted years and years of stamp duty revenue.
Robert Simeon
Kylie,
The previous (no abolished) tax that crucified our property market was the Premium Property Tax – courtesy of Carr and Egan. They should simply dismantle this second tier government once and for all. Set up a separate body of intelligent business people to administer the portfolios – or just engage some of the really smart people in say PricewaterhouseCoopers. People who know what they are doing – as against the current mob!
Kylie Emans
Business people is what we need…
Matt
Kylie, I can understand that you might be opposed to the new tax. Of course the property industry is going to fight a new property tax, just as the mining industry is fighting a new mining tax at the Commonwealth level.
But please keep your arguments to reality. Hyperbole helps no-one.
You write: “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.”
You seem to be suggesting the Premier is wrong, but you’re talking about two different things. She says 70 per cent of transactions state-wide won’t be affected, and you respond that the median price in Sydney is $600,000. Well, NSW is a big state Kylie, and prices outside Sydney are generally lower than prices inside Sydney, so the Premier’s figures sound about right to me.
By all means, argue against the tax, but please don’t resort to hyperbole.
Greg Vincent
That’s OK Kylie I get the Greece bankruptcy reference.
The NSW Labor party have a history of rallying together to make stupid policy decisions and then oust their Leader,Treasurer,Minister, etc and within a matter of days they disown them.
They did it with Egan, Carr, etc and after what Tony Kelly, Minister for Lands has said watch the back-stabbing that will go on.
Watch your back Tony Kelly, chances are that you’re next to suffer a similar fate.
Kylie Emans
Yesterday I received the “real estate business” e-bulletin and the lead story was how housing finance commitments have slumped to a 12 month low. The governments timing is impeccable! Let’s encourage buyers a little more with a new tax.
Fred Haggar
Kylie
Agree it is another cash grab but comparing NSW economy to the Greek one is a bit rich. Despite our politicians, we in NSW still fair much better than those handkerchief swingers!
As a buyer, I would not mind paying this charge provided these politicians promptly implement the proposed rule that “every” vendor must produce all necessary diligence reports via independent providers and make them available to all prospective buyers. Passing this regulation would save the NSW buyers a lot more than this cash grab would cost!
Kylie Emans
Just had my first question from a buyer about the new tax, I had to try to explain what it was for, mmm, maybe the state government could send some representatives out to explain this to people. I mentioned that the government felt they needed extra money for fraud investigations and she just laughed at me!
Mac
The stock brokers, merchant wankers, financial and business consultantshad a go at running my nation and gave us the worst financial disaster since The Great Depression! How soon we forget just how bad it was, and still is for most of the World! Cut-out the states and instigate a flat tax of 1.5% on anyone and everyone. This would provide more tax funds than we could poke a stick at ‘cos the Rio’s and BHP’s, Fortescue’s, PBL’s Casinos etc etc would have no wriggle/grizzle room. And if the Govt is saving so much on the removal of personal tax returns, imagine apart from the increased revenue what it would save not having to mess-around with the corporations tax mine-field!
Peter Ricci
This is just a State Government out of ideas. Successive governments just cannot keep their stinking hands out of the property jar.
How much longer do we have to put up with this group of misfits?
Kylie Emans
Fred I don’t know about that, if they are that desperate to hit up buyers again with another tax, I think they are showing that NSW is in a dire situation. On the point of vendor reports I have no problem with that and in fact I encourage vendors to do pest and building inspections and have them available to buyers, it can be very enlightening for all!
Kylie Emans
Matt, I realise the Premier is talking about the whole of NSW, the metro population of Sydney is 4.5mil approx and total population of NSW is 6.98 mil approx so yes even though I was talking about Sydney when I quoted the median house price of Sydney I do realise there are other areas besides Sydney. But I still want to disagree with the Premier on her 70% stats, to me this stat seems misleading. Regarding hyperbole, a common writing tool to attract readers, I also won’t apologise!
Peter Carabot
RBA, NSW government, the Feds budget…. is this the next recession we had to have??? Or is it that as usual Labor waste the money that the coalition has managed to put aside and now needs to increase taxes, fines and charges just to be able to pay politicians salary??
Chris Wilkins
Well how does one reply to this……….?
unbelievable. so what is the differnec between ‘stamp duty’ and this new tax they are calling a ‘land transfer’ tax….?
not much i would say
Ricky
The sooner Mike Baird who is the Shadow Finance Minister and Shadow Treasurer is elected Opposition Leader the sooner NSW will recover. Mike is the current member for Manly and as suggested by many has considerable ‘business acument’ having been a Senior Exec with NAB andx HSBC both here and overseas.
He is a first term politician but his father was a State and Federal member for almost 15 years so he knows the ropes.
Financially he knows how things should tick.
Step 1 Replace Barry with Mike.
Step 2 Replace Kristina and her bumbling peasants with Mike and his revamped team.
louise atkins
Wow. A real estate agent who is up to date with the current property market. How many agents could you phone today and have this tax explained to you as a buyer or seller. Well done. And reading through all the comments, what has building reports got to do with another rip-off tax?
Glenn Batten
Matt…
You are the one that used the word Hyperbole so lets look at its definition.
Hyperbole is a rhetorical device in which statements are exaggerated. It may be used to evoke strong feelings or to create a strong impression, but is not meant to be taken literally.
Ahhhh.. you did not take her literally did you because if you did that is actually your problem not Kylie’s 🙂
If you are that offended by hyperbole then you better stop reading this and most blogs and most of the newspapers and magazines ever printed.
Cameron Langley
What can i say yet another Scam by the NSW gov.
No wonder so many of my clients are looking to move interstate.
I wonder how much longer we will have to put up with the mismanagement of our State, and what mess will they leave the place in?
Greg Vincent
The fact that Premier Keneally tried to explain that the tax won’t affect 70% of property transactions means very little.
Investors whether they be living in NSW or outside of the state will hear that the NSW Govt are slugging the property market with yet another tax and they’ll run a mile.
This government runs around on one hand trying to pinch the Grand Prix from Melbourne to inject revenue into our economy and then they send property investment interstate at a time when rental demand is at record levels (and rental demand only looks set to increase further as interest rates increase).
Who comes up with these hair-brain schemes?
This could go down in the history books as possibly one of the most out of touch decisions ever made by a NSW Govt.
GalleryAgain
“Investors whether they be living in NSW or outside of the state will hear that the NSW Govt are slugging the property market with yet another tax and they
Nick
I moved from Queensland to NSW a year ago and the contrast is amusing to say the least. Well it would be amusing if the NSW government didnt actually govern a entire state.
Mac I have heard of the idea of flat rate taxing transactions. It does have some perks like killing tax havens (still need to move the money to them) and its about as fair as you can get.
There are some flaws with it though.
Matt, there is one rule you need to apply to politicians who say stuff like ‘It wont affect 70% of people’. If that was true, then the government wouldnt get much money out of it would they?
You dont get a lot of money by milking 30% which means you need to question that figure.
Kylie Emans
Exactly Greg, hair brain scheme is what it is with not much brain involved!
Ian
Don’t worry about your buyers being upset, send them to Queensland with there money and we will help avoid the NSW tax!
Greg Vincent
Ian, I agree that you’ll end up with more buyers, but unfortunately you might end up with a bit more than you’d bargained for.
With National Real Estate Licensing now in existence you may end up with more competitors due to NSW agents moving interstate to get away from this ridiculous government.
I’m sure that’s just what Queensland needs, more real estate agents????
Henry
NSW labour is already thinking of introducing a new tax called DIL tax Defecation In Lavatory Tax. A meter will be installed in very home and business that is hookup to the Great white Elephant NBN that will count every flush and you be charged a fee, expect in Parliament because we all know they full of it.
Kylie Emans
Does anyone know if this new tax will be payable on properties that have exchanged prior to 1st July but haven’t settled by July 1st, 2010? Fielding lots of questions today on this.
Robert Simeon
Kylie, my understanding is that it relates to acquisitions from 1 July 2010.
Kylie Emans
Thanks Robert!