Property sector hit hardest by NSW Government’s tax grab

Business groups are warning the New South Wales Government’s decision to increase taxes by $3.6 billion will hurt the state’s business sector, with the property sector the hardest hit.

Business groups are warning the New South Wales Government’s decision to increase taxes by $3.6 billion will hurt the state’s business sector, with the property sector the hardest hit.

The NSW Government will raise $680 million by increasing the land tax rate from 1.6% to 2% for properties over $2.25 million in land value.

The NSW director of the property council of Australia, Ken Morrison, says the increase will lift land tax bills for those affected property owners by 25%. He argues the tax hike will increase holding costs for land owners, discourage developments and lead to an increase in rental charges.

“The 25% increase in land tax rates comes when the commercial property sector is reeling from the financial crisis, and will mean further job losses for them and their business tenants.

“This will cost jobs in the property sector, which is already shedding staff at more than one hundred a week.”

It won’t just be the property sector that is hurt by the increase – Morrison says twice as many companies pay land tax in NSW than pay payroll tax.

“We recognise the pressures the NSW budget is under, but this is the wrong time to hike taxes.”

The land tax increases were part of a $3.6 billion package of tax hikes from NSW Premier Nathan Rees and Treasurer Eric Roozendaal.

The mining sector will be slugged with a $1.2 billion increase in coal royalties, while businesses and households will pay an extra $939 million after the NSW Government deferred the abolition of a number of stamp duty charges, road charges and other levies.

Businesses using motor vehicles will be particularly hard hit, after the Government decided to double the parking space levy to $2000 a year for every commercial off-street space within the CBD, Milsons Point and North Sydney and increase tolls on the Harbour Bridge and tunnel.

NSW Business Chamber chief executive Kevin MacDonald says that business will be pleased that the Government kept its promise to cut payroll tax, but the other tax hikes are disappointing.

“Now is not the time to hit employers with higher taxes to fund shortfalls in the budget.

“Business needs a confidence boost at the moment, and in some instances, what’s been delivered will make it harder for business owners and operators to make ends meet.”