Taxation and Financial Policy

Context

Taxation is a major contributor to the high cost of development in Australia. The development and construction industry is one of the most heavily taxed sectors in the Australian economy, with various government taxes and charges accounting for up to 44% of the price of a new house in some cities. As a result of the escalating level of taxes and charges on the development of new homes, housing affordability pressures have arisen throughout Australia.

Many of these taxes on development are economically inefficient and inequitable, further discouraging investment in development, contributing to Australia’s housing shortage, worsening housing affordability and damaging the nation’s economy.

Position

The UDIA calls for:

  • Greater recognition of the urban development sector as a major component of the State’s economy;
  • The lowering and phasing out of stamp duty, moving to a broad based land tax system which distributes tax more equitably;
  • Examining alternative infrastructure investment models which seek to remove upfront developer charges, funding infrastructure over extended timeframes through recurring and appropriate charges related to development;
  • Land taxes to be applied only to the unimproved value of the land to prevent investment disincentives and encourage the highest and best use of the land;
  • Reform to ensure GST contributions are equitable and not duplicated for development projects.