Marriage Tax Penalty, House Tax Penalty
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
Tax Disincentives Abound
Going to Marry?
Below is the text of a radio broadcast by the Justice Party of Australia.
Are you looking for a house? Or hoping to build one, despite the high prices? Are you compelled to live under cramped conditions with other people? Or perhaps you are paying an exorbitant rental for a small flat while waiting desperately in the hope of obtaining a satisfactory house?
In any case, most of us are affected directly or indirectly by the housing shortage. And when people are called upon to defend their country and yet are unable to secure adequate housing, there is surely something radically wrong somewhere.
Now let’s take a typical case of a young couple who want to set up a home of their own. Firstly, they must secure a site. Usually they have to pay a pretty stiff price, often inflated by speculative reasons, since holders of vacant blocks often wait for the opening up of new districts, then when they sell they can get a much bigger price. And when the couple begin to build, they find prices of building materials very high. So when there are sales and tariff taxes of the order of 25, 33, and 50 per cent., it is not surprising that young people find it hard to build, especially with the prospect of being saddled with a big debt for most of their lives.
Now it’s not hard to see that our system of raising revenue is largely responsible for this state of affairs. Suppose that we altered this system; suppose that the community were to take the rental value of the bare land, or the site value, then the price of land would be greatly reduced. In addition, more land would become available, for it would simply not pay to keep land idle with a stiff levy on its unimproved value. Then those wishing to build would not need to expend a substantial portion of their savings simply to gain their right to a site. They would merely be required to pay to the Government an annual rental of about five per cent. of the site value of their land. And further, since Government authorities would now be obtaining their revenue from land values it would be possible to reduce and indeed eliminate tariff taxes, sales taxes, and municipal rates on improvements, thereby reducing the price of building materials and similar goods.
Well, you may ask, does this theory work in practice? Yes, it has been clearly demonstrated in the field of municipal property taxes. Here are a few facts: Studies by the Melbourne Land Values Research Group showed that in the period 1921-40, those Melbourne municipalities rating (property taxing) on land values only, built more than twice as many houses per acre available as their counterparts (i.e. comparable municipalities) which were rating improvements. Had they all used site value rating, there would have been an extra 46,000 houses built in these districts of Melbourne during these 20 years.
Of course, the rating (property tax) system is not the only relevant factor, but it is an important one, since the improving of properties is not penalized by increased rates under the site value system.
Now let us understand quite plainly that the housing situation is not merely a matter of economics and finance. It is closely linked with the rising divorce rate, with family frictions, with juvenile delinquency, and with the retarding of the development of the personalities of little children. It is connected with the subject of health, for obviously bad housing conditions promote illness, and all the grandiose health schemes are virtually useless if people are compelled to live under bad housing conditions.
The position is this: the housing shortage as well as many another social trouble, is related to the fact that land values which are created by the people, are appropriated by individual landholders; and instead of these values being used as the source of government revenue, all sorts of burdensome taxes are imposed on labour and its products, thus robbing labour (and capital) of the full value of their efforts. The Justice Party stands to remedy this injustice.
— G.A. Forster
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