Following weeks of criticism from all sides of the property industry, the Queensland Government has decided to scrap its proposed changes to land tax.
Queensland Premier Annastacia Palaszczuk was forced to back down on the controversial tax law that would have potentially cost interstate and expat investors tens of thousands of dollars per year.
Under the proposed changes, property owners that held real estate assets in multiple states, including Queensland, would be subject to property taxes on the total value of their national property holdings.
A move that industry bodies labelled a, “tax grab,” which would discourage investment in the state leading to further shortages of rental properties.
The tax also faced the problem of a lack of support from other states. Notably, NSW Premier, Dominic Perrottet, refused to cooperate in handing over any data relating to Queensland residents,’ property holdings in NSW.
Economists assessed it would affect approximately 10,000 investors, and recover almost $20 million a year, from 2023–24, for the Queensland State Government.
A spokesperson for State Treasurer, Cameron Dick, confirmed the land tax changes had been dumped.
“The Treasurer stands by everything he’s said about land tax, but of course he accepts the decision the Premier has made after talking to other leaders,” the spokesperson said.
Mr Perrottet backed Ms Palaszczuk’s decision to abandon the tax.
“I applaud the decision, it was the right one,” Mr Perrottet said.
The move to abandon the tax was also welcomed by renters across Queensland. The state is currently experiencing a severe shortage of rental stock and a new tax that would potentially see many investors forced to sell their properties was cause for alarm for many industry groups.
REIQ CEO, Antonia Mercorella, welcomed the news that could have damaged property investor confidence at a time of the tightest vacancy rates in history.
“Abandoning the contentious land tax regime will bring confidence back to the property investor market in a time of great uncertainty,” Ms Mercorella said.
“The REIQ has led the charge against this land tax since December last year and we worked with various stakeholders to fight the changes."
Ms Mercorella said the move to scrap the tax was the right one.
“To send shockwaves through the private housing investment market during a rental crisis was unprecedented and illogical,” she said.
“The land tax changes would have also potentially impacted commercial property investment and national employers with Queensland domiciled premises."
“We appreciate the government’s move to shelve this retrograde tax reform and look forward to working with them at the Housing Summit in October to address the state’s housing supply issues.”