TAXATION

1
TAXATION

• Frank Stilwell
• Professor of Political Economy
• University of Sydney
• Presentation to Shelter NSW seminar, Building
  blocks housing challenges and opportunities for
  New South Wales, Sydney, 9 November 2006

2
THEMES

• Current tax arrangements and their relationship
  to housing
• Problems arising from the current arrangements
• Possible alternative arrangements

3
A GOOD TAX SYSTEM

• Potent
• Simple
• Equitable
• Efficient

4
CURRENT ARRANGEMENTS

• Federal taxes on personal income
• (including capital gains), business
• profits, and expenditures
• State taxes on payroll, transfers (eg.
• stamp duties) land, gambling,
• vehicle ownership
• Local Council rates

5
FEATURES OF FEDERALISM

• Vertical Fiscal Imbalance
• - Commonwealth General Purpose and Specific
  Purpose Payments
• Horizontal Fiscal Imbalance
• - the role of the Commonwealth Grants Commission

6
CURRENT NSW SITUATION
7
NSW STATE TAX REVENUES (2006-7)
8
TAXES IMPOSED ON HOUSING

• GST on costs of building new housing
• Income tax on income from investment properties
• CGT on income from sale of investment properties
• Land-tax (with one property exempt)
• Stamp duties (on purchase of land/house)
• Local government rates

9
TAX CONCESSIONS TO ASSIST HOUSING

• Exclusion of imputed rents from income tax
• Exemption of owner-occupied housing from CGT
• Exclusion of housing rents from GST
• Negative gearing

10
OTHER HOUSING SUBSIDIES

• First home owners scheme
• Rental assistance (private sector)
• Rental subsidies (public sector)

11
HOUSING PROBLEMS

• Owner-occupied housing a land price problem
• Private rental housing high incidence of stress
• Public rental residual/welfare?
• Emergency housing homelessness

12
PROBLEMS IN CURRENT TAX ARRANGEMENTS

• Society becoming more economically unequal
• Land becoming more expensive
• Urban Development more ecologically unsustainable
• Mcmansions
• spreading cities

13
ALTERNATIVE APPROACHES

• Tackling Economic Inequality
• - income tax reform
• - inheritance tax
• Shift to more emphasis on land tax
• Other ecological taxes (changing urban form)

14
CONCLUSION

• No quick fix for housing problems
• A green revolution?
• - social justice affluenza, and
• economic inequality
• - ecological sustainability housing
• design and urban form
• - tax reform as a driver of change?

15
TAKE-HOME MESSAGE

• Could a nationally uniform land tax system
• finance better provision of public housing?