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The McGowan Government has handed down its 2017-18 State Budget and has listened to the concerns of the WA property industry by not meddling with property taxes.
In the Treasurer’s speech, the Hon. Ben Wyatt MLA advised the State Government did not consider increases to property taxes for WA residents as part of their Budget repair measures, recognising the impact of the three consecutive land tax increases in previous Budgets.
REIWA Deputy President Damian Collins said given the McGowan Government had faced challenges when it came to the State’s fiscal position, it was pleasing to hear there would be no increases to property taxes for WA residents.
The Government is planning to introduce a four per cent foreign owner duty surcharge on purchases of residential property by foreign individuals and entities from 1 January 2019. This is expected to create $49 million in revenue by 2020-21.
“The introduction of a new foreign owner duty surcharge could hinder overseas property investment. Despite foreign investors only representing a small proportion of the WA property market, caution must be placed to ensure this section of the market does not reduce further.
“The Government expects to create revenue from this surcharge, however, it may only worsen the situation in terms of transfer duty revenue, as potential foreign investors may be less incentivised to purchase residential property in WA,” said Mr Collins.
In its pre-budget submission, REIWA recommended the Government introduce five key areas of reform:
Make no further changes to rates or thresholds for land tax.
No increase to transfer duty rates or change thresholds.
Undertake a state tax review to assess the viability of a shift to a broad-based land tax system that ultimately removes transfer duty.
Maintain the existing transfer duty exemption for first home buyers at $430,000 and re-introduce the $3,000 First Home Owners Grant for existing dwellings.
Introduce a $10,000 concession on transfer duty for seniors over the age of 65 to encourage ‘right sizing’.
“REIWA welcomes the State Government’s commitment to keep property taxes on hold for WA residents and whilst some of the reforms we recommended were not addressed in the Budget, we appreciate the current fiscal position,” said Mr Collins.
The State Budget also revealed that growth in the State economy is expected to recover from 0.25 per cent in 2016-17, to three per cent in 2017-18. Employment growth is also forecast to recover, with nearly 20,000 jobs expected to be created in 2017-18, attributed to a modest increase in population growth expectations.
“The McGowan Government should be congratulated on their efforts in reducing the State’s debt. REIWA will continue to work with the Government to help home ownership become a reality for more West Aussies and also assist the Government in getting the Budget back to surplus,” said Mr Collins.