Tax hits ‘soft targets’

A PROPOSED Victorian land tax is nothing more than a “big ticket” revenue raising exercise aimed at soft targets, the head of the Victorian Farmers Federation says.
VFF president Andrew Broad said that the Growth Areas Infrastructure Charge (GAIC) was a poor policy that would set a dangerous precedent.
“The concept of a growth areas tax is ridiculous,” he said. “This policy goes right to the heart of the principle of taxation.”
Under the proposed scheme, properties brought into the Urban Growth Boundary (UBG) in 2005 would be subject to a levy of $80,000 per hectare, while those included in 2009 or after would be charged $95,000 a hectare.
The State Government is introducing the tax to “reflect” the potential of land to be developed in the future and funds generated from it will contribute part of the cost of providing infrastructure and services in growth areas.
The VFF recently made a submission to Victoria’s Growth Areas Authority confirming farmers’ total objection to the GAIC.
Mr Broad said the proposed tax failed the fairness test when it came to the principal of benefit.
“Those who benefit from the infrastructure should pay for it. It makes no sense for landholders selling land, and leaving the area, to be forced to pay for infrastructure they will not use,” he said.
Mr Broad also said the charge shouldn’t be levied at the point of sale. “If the government is serious about recouping the costs of infrastructure in new development areas, outside of general revenue, then this should be done at the point of land use change. When land is approved for development, the developer should pick up the bill, not the property owner,” he said.
The VFF, in its submission, urged the State Government to abandon the tax and consider other, more equitable forms of funding infrastructure in Melbourne’s growth areas.
“The developers are the entities that will benefit and ultimately rely on the infrastructure so the ‘contribution’ is most appropriate at that point,” the submission read.
Growth Areas Authority (GAA) chief executive Peter Seamer has publicly rejected claims that the charge would disadvantage affected landowners, saying most were excited about being included in the UGB as it pushed up land values.
He said the vast majority of properties, especially those brought into the UGB in 2005, were going to be worth a lot more money than the base rate for farming plus the levy.
But Mr Broad said the GAIC was an unfair proposal and was concerned about its implications.
“This policy sets a dangerous precedent and leaves other rural landholders questioning the real possibility that their land might soon attract other ill-conceived taxes,” he said.