Land tax in Australia : fiscal reform of sub-national government

394 Pages·2016·4.437 MB·English

by  Vince Mangioni

Land Tax in Australia
Land Tax in Australia defines how land tax operates and is administered across state and local
government in Australia. International expert Vince Mangioni reviews the current status and
emerging trends in these taxes in Australia and compares them with the UK, USA, Canada,
Denmark and New Zealand. Using substantial original research, the author sets out what
Australia must do through practice and policy to reform and bring this tax into the twenty-
first century.
The need for fiscal reform and strengthening the finances of Australia’s sub-national
government is long overdue and is key in reforming Australia’s federation. These reforms aim
to minimise the taxpayer revolts encountered in previous attempts at land tax reform, while
improving tax effort in line with other advanced OECD countries.
This book provides an essential resource for all property professionals working in
development, valuation, law, investment, as well as accountants, tax economists and
government administrators. It is highly recommended for students studying property, taxation,
legal and social science courses.
Vince Mangioni is Associate Professor at the University of Technology Sydney, Australia. He
is an internationally recognised expert on recurrent land and property taxation and frequently
speaks at international conferences and industry workshops on this subject.
“Recurrent property taxes are a very important source of revenue used to support the
provision of local services in many countries around the world. However, they are often
unpopular and can be controversial. Part of the reason for their unpopularity is that they often
lack transparency and are frequently misunderstood both by those who are called upon to pay
the tax and by the politicians who are responsible for the property tax system. At the present
time, land tax in Australia is very much in the headlines and the subject of debate both locally
and nationally; there is considerable pressure for reform of land tax, but there is also
significant resistance. I am very pleased therefore that Vince Mangioni has written this book to
assist in clarifying the key issues and providing international case studies that will assist
policy-makers and the public in understanding and modernising the current land tax system in
Australia.”
– Paul Sanderson JP LLB (Hons) FRICS FIRRV, President, International Property Tax Institute
Land Tax in Australia
Fiscal reform of sub-national government
Vince Mangioni
First published 2016
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2016 Vincent Mangioni
The right of Vincent Mangioni to be identified as author of this work has been asserted by him
in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilised in any
form or by any electronic, mechanical, or other means, now known or hereafter invented,
including photocopying and recording, or in any information storage or retrieval system,
without permission in writing from the publishers.
Trademark notice : Product or corporate names may be trademarks or registered trademarks,
and are used only for identification and explanation without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Mangioni, Vincent, author.
Land tax in Australia : fiscal reform of sub-national government / Vincent Mangioni.
  pages cm
 Includes bibliographical references and index.
 1. Land value taxation—Law and legislation—Australia. 2. Real property tax—Law and
legislation—Australia. 3. Real property and taxation—Australia. I. Title.
 KU2830.L36M36 2016
 336.220994—dc23
 2015023187
ISBN: 978-1-138-83125-4 (hbk)
ISBN: 978-1-315-73666-2 (ebk)
Typeset in Baskerville
by Apex CoVantage, LLC
Contents
List of tables
List of figures
Acknowledgements
About the author
Overview
Book structure
Terms and acronyms
Part 1
Status quo and the evolving challenge
 1 Advance Australia fair
Introduction
Structure of government and evolution of Australia’s tax system
Inquiries into tax reform and government expenditure
Tax reforms of the late 20th and early 21st centuries
Taxation design and economic reform
Summary
 2 Evolution economics and status quo of taxing land
Introduction
Economics of taxing land and the urban challenge
Land tax: from settlement to the present in Australia
Land tax revenue trends and principles of good tax design
Summary
Part 2
Land tax assessment and administration in Australia
 3 Definitions and bases of value
Definitions of value
Bases of value
Australian bases of value
Summary
 4 Valuation of land and assessment of land tax
Introduction
Research method and rationale
Research method – simulations
Residential simulation
Retail simulation
Residential/retail comparison
Summary
 5 Principal place of residence
Introduction
Data matching or reform
The need for fiscal reform
New South Wales – defining the principal place of residence
Queensland – defining the principal place of residence
Victoria – defining the principal place of residence
South Australia – defining the principal place of residence
Tasmania – defining the principal place of residence
Western Australia – defining the principal place of residence
 6 Business use, investment and development land
Introduction
New South Wales (NSW)
Queensland
Victoria
South Australia
Tasmania
Western Australia
Northern Territory
Australian Capital Territory
 7 Objections, appeals and enforcement
Introduction
New South Wales land values – objections and appeals
Victoria
Queensland
South Australia
Tasmania
Western Australia
Northern Territory
Australian Capital Territory (ACT)
Summary
Part 3
Recurrent land taxation – international case studies
 8 United States and Canada
Overview
United States
Summary
Canada
 9 United Kingdom – England and Ireland
Overview
England
Ireland
Summary
10 Denmark
Reform of sub-national government
An evolving finance path and equalisation system
Role of land and property taxation
Current land and property taxation
Operation of land and property value tax 2001/02 to 2014
Tax freeze for property value tax
Ceiling on buying and selling property
Limiting property value tax rises from year to year
Strengths of the land and property tax system
Challenges of the land and property tax system
Options for reform in 2015/16 and beyond
Summary
11 New Zealand
Overview
New Zealand’s tax system and tax mix
Local government
Land and property taxation
Bases of value
Objections to valuations
Summary
Part 4
Reforming land value taxation and fiscal reform of sub-national
government in Australia
12 Reforming recurrent land tax under the status quo
What is land tax in a modern Australian tax system?
Land tax reform under the status quo
Bases of assessing land taxes
The emerging value and rating phenomenon
Summary
13 Realigning Australia’s tax system
Introduction
Property tax reform and housing mobility
Recurrent land tax reform
A modern Australian tax framework: top-down and bottom-up reform
Which tier of government should levy recurrent land tax?
Conclusion
Where to go from here
References
Index
Tables
1.1 Ranking as a percentage of tax to GDP 2010
1.2 Percentage share of taxation revenue by sphere of government over past two decades
1.3 Tax collected by central government
1.4 Income tax rates and threshold comparison
2.1 Evolution and structure of government and property tax
2.2 Concessions for pensioners and first homebuyers
2.3 Local rates and state land tax as a percentage of total revenue, 2008–09
2.4 Global trends in land tax revenues
2.5 Recurrent land tax expenditure 2013
2.6 Change in land tax revenue as percentage of local government rate revenue 2001–2012
3.1 Bases of value by level of government
3.2 Bases of value across Australia
3.3 Value v evidence of value
3.4 Valuation frequency and provider
4.1 Simulation and survey response rate
4.2 Participant representativeness of completed responses
4.3 Residential land simulation summary
4.4 10 Fiction Street – change in standard deviation
4.5 10 Fiction Street – change in mean value
4.6 15 Fiction Street – change in standard deviation
4.7 15 Fiction Street – change in mean value
4.8 20 Fiction Street – change in standard deviation
4.9 20 Fiction Street – change in mean value
4.10 Sales analysis and land value summary
4.11 Standard deviation comparative analysis
4.12 Retail land simulation summary
4.13 15 Main Street – change in standard deviation as percentage of mean values
4.14 15 Main Street – percentage change in mean value
4.15 5 Bank Road – change in standard deviation as a percentage of mean values
4.16 5 Bank Road – change in mean value
4.17 20 Main Street – change in standard deviation as percentage of mean values
4.18 20 Main Street – change in mean value