NEWS THAT MATTERS
A devil in disguise
or an old-fashion snake oil salesman?
Two years ago, Dominic Perrottet made it clear that he wanted his plan to put a ‘forever tax’ on the family home to affect 80 per cent of properties in New South Wales. Now that his First Homebuyer’s Tax has passed into law, supported by the Greens in the upper house, and independent cross benches in the lower house, Perrottet believes that he is off and running with the biggest con since ‘snake oil’ salesman stood on their corner soapboxes.
22 November 2022
THE Grapevine has reported variously on Perrottet’s ‘forever tax’ - an annual land tax bill that will thrust homeowners' into a reincarnation of the Medieval Feudal system.
According to a recent Commonwealth Bank report, New South Wales has the weakest economy of any state in Australia. The report found that NSW was the only state on the eastern seaboard where business investment actually fell and that access to finance for housing has shrunk faster in New South Wales than anywhere else in the Commonwealth.
And to add to the daily struggle, rising interest rates are eating away at household budgets, particularly for many first homebuyers who can no longer afford their extra mortgage repayments.
All of this added to the increased cost of living.
When wages have been stagnant and interest rates rising, petrol going up, electricity charges skyrocketing out of control and everything else, including the weekly shop, going through the roof, where will Perrottet’s annual land tax payment come from? – directly from household budgets.
And make no mistake, Dominic Perrottet’s plan for a land tax for first home buyers is a Trojan horse. This is just the beginning.
“What we’d like to see is about 80 per cent of properties across the state have access to this scheme.” Dominic Perrottet Press Conference, 17 November 2020.
Perrottet himself has said land tax for first home buyers “is the start”, and that his land tax “reform is a journey” and that “what you do is lay the foundation first.”
In fact, in July this year Dominic Perrottet revealed his second step on that land tax journey is extending land tax to pensioners – something he refuses to rule out.
Under Dominic Perrottet the annual tax you will pay will increase as the value of your home increases.
The land tax rate will increase by up to four per cent of the increased value every year. And Mr Perrottet refuses to rule out future governments being able to increase the tax rate even further.
But here’s the kicker, the ‘snake oil con’ - the legislation only gives first home buyers of properties worth less than $1.5 million, and vacant land intended for the construction of a first home valued under $800,000, an option to pay an annual fee equal to $400 plus 0.3 per cent of the land value, instead of an up-front lump sum of stamp duty. Anything above the magic $1.5 million and it’s a no go for an alleged ‘welcoming’ annual land tax bill.
In Perrottet’s original pitch, any home buyer would have been able to choose between paying stamp duty or a land tax — and if the choice was the latter, the unwitting homeowner would be subject to that tax going forward, eating away the household budget as their homes increased in value.
“For many people, choosing the annual property fee won’t just remove one of the biggest up-front barriers to buying a home — it will also mean a significant tax saving if they go on to sell their first home in the short-to-medium term to meet the needs of a growing family or a job in a new location,” he wrote in an opinion piece for The Sydney Morning Herald.
And if the annual ‘forever tax’ bill becomes a financial burden, it won’t be just a simple matter of saying “let’s switch” – you still have to pay the outstanding balance, equivalent to the original stamp duty that would have been charged, less 'forever tax' payments already made.
If a first homeowner can no longer afford the ‘forever tax’, where does Perrottet think they will conjure up the money to make the switch. The only alternative – sell the family home! A double-edged sword that could well see many first home owners thrust back into the stamp duty market, except this time around the prices of property will no doubt have increased exponentially.
Labor did not support Perrottet’s First Homebuyer’s Bill and have stated on more than one occasion that if elected in March 2023 the legislation will be repealed.
Daniel Mookhey, NSW Shadow Treasurer said, “No one likes paying stamp duty, but Dominic Perrottet wants to replace this one-off payment with a forever tax that will cost the average homeowner about $2400 a year.
“He’s starting with first home buyers and earlier this month refused to rule it out to pensioners.
“But we all know what he wants to do. For years, first as Treasurer then as Premier, Dominic Perrottet said he wants to see this scheme on 80 per cent of properties in New South Wales – four out of five properties.
“They promised no privatisation before the last election, and the next second they sold off WestConnex and the buses. If they win in March, it will be a land tax on everyone’s homes.”
As previously reported by the Grapevine, people want reform on property stamp duty but not a ‘forever afterpay system' that could easily plunge them into dire financial circumstances.
So much for the Liberal's mantra of years gone by: 'your family home is your castle'.
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