Several of Australia’s most respected economists and tax professionals have sounded the alarm bell about Dominic Perrettot’s proposed land tax on family homes, warning it will pump up property prices, making it harder for first home buyers to enter the property market. 

AMP Capital Chief Economist Shane Oliver has told The Australian Financial Review that:

“It does put more money into the hands of buyers and therefore can potentially push prices up, all things being equal. So it has a stimulatory impact.”

Fady Abi Abdallah, a tax partner at BDO, issued his own warning telling the AFR:

”The market is likely to quickly adjust to reflect the increased purchasing power of first home buyers, so it’s a bit of a double-edged sword as any upfront duty savings are likely to be offset by increased purchase prices,”

Meanwhile Eliza Owen, CoreLogic’s head of research, said that “it doesn’t seem to be addressing much of the affordability issue in NSW housing“

This intervention comes the day after Dominic Perrottet had to commit to stopping the land tax from rising by more than 4% per year. 

Shadow Treasurer Daniel Mookhey said:

“Even economists sympathetic to a land tax acknowledge that property prices are more likely to rise than fall if Mr Perrottet pushes ahead with his plan.”

“Had Mr Perrottet land tax operated since 2015, a home owner’s tax bill would already have risen by almost twice as fast as their wages.”

“My worry is that Mr Perrottet’s plan won’t work, but it will hurt.

“Mr Perrottet is not being upfront with the potential impacts of his land tax.

“The Premier shouldn’t try to rush it through the Parliament in the fourteen sitting days left before the election. He should instead let people have a say at the polls.”

DANIEL MOOKHEY MLC
NSW SHADOW TREASURER