Only days after declaring it had no intention to back down on the introduction of its controversial new land tax regime, the Queensland government has done a dramatic backflip.
And, for now at least, the property industry is collectively breathing a sigh of relief.
In Canberra for a national cabinet meeting, Queensland premier Annastacia Palaszczuk announced the widely criticised scheme would be shelved in a major turnaround after considerable industry pressure against its implementation as well as political opposition.
It was feared the new tax system would severely impact the sector, discouraging interstate developers from investing in the Queensland housing market and worsening Queensland’s rental property crisis.
But by deferring the change, Palaszczuk has still left the door open to revisit its introduction in the future.
Under the new scheme, land tax was to have been calculated based on land owned across Australia, not just in Queensland.
Pressure on the Palaszczuk government had mounted in recent weeks with other state premiers and governments threatening to thwart the move by withholding land ownership information.
Landowners would have needed to declare their interests across the country to determine whether they exceeded the tax-free threshold of $600,000 for individuals and $350,000 for companies and trustees. This would have then been used to determine land tax rates on Queensland properties.
It was claimed by the state government the new tax would only affect about 10,000 landholders and raise about $20 million a year from June, 2023.
Property Council Queensland executive director Jen Williams said the government had made the right decision, given the expected impact on rental affordability and investor sentiment.
But she said it should be “completely scrapped, and not just put on the shelf until a future day”.
“As details emerged of how the new tax would be implemented, it became clearer just how untenable it would be,” Ms Williams said.
“Over the past few weeks, we have seen the Queensland government take swift and decisive action to address the state’s housing crisis, with the shelving of this tax now added to the list.
“With opportunities like the Brisbane 2032 Olympics on the horizon, ensuring Queensland has a stable and attractive investment environment has never been more important.”
Acting Property Council NSW executive director Adina Cirson said setting aside plans to implement the so-called “interstate land tax model” was also a significant win for NSW residents, who faced the possibility of “double land taxes” across the border.
“This outcome represents a significant win for both investors and renters and is an acknowledgment of the current housing crisis—and that we all need to be working together to solve this very wicked problem, not making it worse.”
Real Estate Institute of Queensland chief executive Antonia Mercorella also welcomed the shelving of the “retrograde tax reform”.
“Abandoning the contentious land tax regime will bring confidence back to the property investor market in a time of great uncertainty,” she said.
“To send shockwaves through the private housing investment market during a rental crisis was unprecedented and illogical.
“The land tax changes would have also potentially impacted commercial property investment and national employers with Queensland domiciled premises.”
PRD Real Estate chief economist Diaswati Mardiasmo, who is also a member of Brisbane’s 2032 Olympics legacy committee, said its data showed Queensland property investors were already on “shaky ground”.
“This land tax would have further shaken confidence and resulted in added pressure for the rental market,” she said.
As it stood, she said the land tax was reasoned as closing a loophole but on the face of it appeared to be a ‘take’ only measure and not ‘give and take’ with no further discussion on abolishing or re-working stamp duty or additional first home buyer grant, or rental assistance.
“Shelving the land tax is a sensible measure at this point in time. It allows for more discussions and wider and more in-depth consultation with a range of stakeholders.”
