WA Labor’s promise to introduce a foreign buyers surcharge if elected at the march State Election has drawn criticism from the Housing Industry Association and the Real Estate Institute of Western Australia.
Meanwhile, WA Labor has criticized the Liberals plan if they are returned to power to introduce a stamp duty concession, which Labor said was unfunded.
During the Liberal’s campaign launch on Sunday, February 19 Premier Colin Barnett said if re-elected his government would introduce a stamp duty concession of up to $15,000 for seniors wanting to downsize into new or established homes.
“The tax cut, to be implemented over two years, will be the centrepiece of a seniors housing reform package and would apply to property worth up to $750,000,’’ he said.
Opposition Treasurer Ben Wyatt said it was a debt-funded promise to buy votes as the announcement had no funding attached.
At the WA Labor campaign launch also on Sunday, Opposition Leader Mark McGowan said if elected Labor would use the $21 million it expected to collect in its first year (2019-20) of implementing the foreign buyers surcharge to pay for health and education services, including freezing TAFE fees (another election promise it announced on Sunday, February 19).
The Housing Industry Association said a stamp duty surcharge on foreign investors would be a retrograde step for the WA economy and a missed opportunity to differentiate WA from the rest of Australia in terms of property investment and would hit tenants.
The association’s WA executive director John Gelavis said the association was opposed to foreign stamp duty surcharges as they depressed demand for new dwellings, resulting in fewer being built.
“The imposition of any foreign investor stamp duty surcharge is likely to negatively impact new dwelling supply at a time we can least afford it, in particular for apartments,’’ he said.
“The influence of foreign investor demand has been important in stimulating new building supply in this area of the market for WA.
“The estimated $21 million in revenue from this measure assumes the strong supply of new dwellings is maintained.
“The median dwelling price in Perth was $490,000 during December 2016.
“With a foreign investor surcharge of 4 per cent, this would mean stamp duty of $36,890 compared with $17,290 for a domestic investor.
The foreign investor’s stamp duty bill is equivalent to an additional $2527 in annual mortgage repayments over 30 years.
“A substantial portion of this is likely to be passed onto tenants in the form of higher rents.’’
REIWA president Hayden Groves said he was surprised Labor had announced the tax without first consulting the industry to understand the repercussions it would have in an already soft market.
“Politicians view property taxes as an easy way to raise funds to pay for something else without proper regard for the impacts on the community,’’ he said.
The Property Council welcomed the Liberal’s announcement not to raise taxes or bring in new ones if re-elected.
The councils WA Executive director Lino Iacomella said WA investors and businesses were ‘taxed-out’ after three big land tax increases and further increases or the suggestion of tax increases would stall the expected recovery in real estate markets in 2017 and would not be tolerated.
“The land tax relief also announced today by the Liberals by raising the minimum land tax threshold to $360,000 will help many owners of single investment properties,’’ he said.
“However this land tax relief does not deal with the major structural problem in the land tax system of aggregation, which leads to more than 80 per cent of land tax being paid by less than 10 per cent of tax payers.
“Land tax aggregation hurts businesses and large-scale investors in job generating projects. The land tax system needs urgent reform, including a move to a flatter tax structure and the phasing out of land tax aggregation.’’
By Anita McInnes