Abstract:
Property is an asset that can be taxed in several ways, because it is both a
capital good and consumption good. Accordingly, governments at all levels
have endeavoured to impose taxes and/or fees and charges on property.
The recently introduced “exit” tax for property investors in NSW has once
again highlighted the vulnerability that property as an asset suffers at the
hands of government. In the NSW budget papers for the 2004-2005 financial
year, total property taxation accounted for 36.7% or $5,700 million of total
State Government revenue. This included Stamp Duty ($3,190 million),
Vendor Transfer Duty ($690million), Mortgage Duty ($372 million) and Land
Tax ($1,448 million).
In addition to state taxes, property is also taxed in several ways at the local
and federal government levels. That is, the three tiers of government profit
from property investors, irrespective of whether individual investors and
developers make a profit or not.
This paper will examine the impact of the combined current taxation and fees
of the three tiers of government associated with property investment in NSW.
In addition, using case studies, the paper will derive the percentage level of
the overall “risk free” profit by government instrumentalities from private
property developments in NSW.
