My first instinct is “yes” but then I thought about it and I think it’s just going to exacerbate the short-stay problem unless combined with other measures.
My first instinct is “yes” but then I thought about it and I think it’s just going to exacerbate the short-stay problem unless combined with other measures.
I think options to defer payment until sale of the house for people with low incomes would be worthwhile, but considering the massive benefit we give to pensioners who own their own home I don’t think it is unreasonable for some of that to be repaid from the sale of the house. If that same pensioner held a similar value of assets in any other form we would expect them to be fully self-funded and they would not see a cent of pension.
well, yeah. Because it’s the house they actually live in, not shares or stocks.
Why does being a house they live in mean it is not also an asset? If someone prefers to rent and save up more money towards their retirement instead of buying a house why should they be penalised? If someone wants to buy an inner city appartment that is worth less and have more money put aside to pay the body corporate fees why should they get less pension than if they have a freestanding house? If someone wants to sell their house, put that money aside while they travel in a van around Australia for a few years and then buy something suitable when it is time to settle down again, why should they lose their pension compared to someone who leaves the house mostly empty while they travel so it doesn’t count as an asset?
We definitely should have some consideration for the fact that this is someone’s house and they shouldn’t lose it because of unrealised capital gains, but we also shouldn’t be creating a two-tier system which also ties people in to keeping a house which may not be suitable for them any more.
Because the value is not immediately and readily accessible without uprooting their entire life.
Tax the shit outta the sale, sure but basically penalising someone for living in their own house opens up a lot of very bad doors.
That’s exacty what I’m arguing. A land tax which is able to be put off until the sale where people have low incomes. That would not penalise anyone, it just means some of the windfall gains from rising property prices go towards paying taxes rather than being a freebie to be passed on to the next generation as inheretance.
You’re still playing the same issue - penalisation.
Ok, you have person A. Been living in their house for yonks, now getting taxed because real estate turned into a batshit ponzi scheme outside their window.
Low income for an pensioner? Well now the can has just been kicked on to penalise the next generation if they sell or want to move into the property.
It’s going to hurt people it shouldn’t, because the ones who aren’t paying their dues will just find a way to skae this as well
I don’t see inheritance as a right, and I definitely don’t think the kids having a small amount of tax owing on the house they inherit as “penalisation”.
Any tax change will involve some changes in who and how much people pay and needs to be handled carefully, but protecting inheritances should come far below paying for services: things like hospitals, schools and nursing homes. The next gereration will hurt a lot more from proposals like an income tax levy, and that will also hurt those who are not priveleged enough to inherit a house.
Yeah i don’t think this is going to be the revenue stream you think it is. We’re better served removing fuel excise and other business tax breaks to raise funding
… so now instead of paying $10k per year, my kids will need to pay $500k when I die? And their only way to avoid it is to move into my place and sell whatever home they currently live in? That sounds pretty crap to me.
Instead of an asset, the family home has become a liability.
Didn’t the whole proposal start with a hypothetical 80 year old pensioner? You think she’s going to live to 130, and her million dollar house is going to suddenly stop appreciating in value, so her poor put upon 100 year old kids will only inherit $500k?
Obviously it is far better to scrap any sort of tax on property than burden the poor kids with a reduced inheritance. Far better to make the poor kids (and grandkids, and everyone else’s kids, including those who won’t get an inheritance at all) cough up now with something like the income tax levy that has been proposed.
I’m no expert in this stuff, I shouldn’t be getting to involved in a discussion on the matter. I don’t entirely disagree with you, but houses are a bit different (and the ATO recognises this fact). As everyone is very (very) aware: 60 years ago, houses did not cost $1 Million. The simple 3x1 on a quarter acre was purchased for something like $30k. The owner paid if off diligently, paid all taxes owed from income through the years and the welfare system in place at the time assured citizens that there would be a pension at the end of their working life.
It is not this individual’s fault that most of the old houses in the street are long gone, that all those blocks were subdivided and that a quarter acre in Carlton North these days is worth $1 Million. They’ve never been rich. They don’t have any liquid wealth.
On the flip side, I agree that wealthy people pay a far smaller proportion of their income in tax than us mere mortals pay. Getting them to pay a similar proportion of tax is desirable. I’d love a solution to this problem. But, I don’t want that solution to hurt thousands of people in the spirit of being ‘fair’.
So what is your argument here, that people who got asset rich through no effort of their own should have that wealth protected so their kids can inherit as much as possible? Is it ok to tax someone if they worked hard to earn the money to buy a $1 million dollar home today, but if you got lucky in the past you should be tax exempt? Tying up your assets in your home already has some major tax benefits - it is exempt from capital gains tax, and barely counts towards the age pension.
Yes there need to be corresponding changes to allow for things like putting off the tax until the home is sold, but I don’t think we should rule out changes to the tax system because your hypothetical home owner didn’t intend to earn 970,000 profit when they bought their home. Perhaps we could also make a change so that this hypothetical pensioner could sell their quarter acre block and move into somewhere smaller that they can more easily maintain, freeing up some of that money so they can actually spend it, without losing most/all of their pension because the same wealth is now “liquid wealth”.
My argument is merely that a flat land tax is not as fair as it sounds on the face of it. There are issues with it - and if the intent is to replace stamp duty with a land tax, that’s a total non-starter for most of the country: since stamp duty has been privatised.
I’m certainly not qualified to produce a solution to the problem.
I’m not qualified to produce a solution either, but I think changes to taxation in some form are inevitable. One of the big issues with taxation is who gets the money. Income tax and GST is collected by the Federal governement, who portion out some of it to the States. If the States need/want more money they need to rely on things like stamp duty, land tax, and fees, charges & fines. So even when it would be logical to make coordinated changes to income and weath taxes it is not really politically feasible.
My understanding is that, like with income tax, a tiered rate instead of a flat rate would be fairest. So if you put a low (or no) tax on properties under the average price you would only be taxing those with a large amount of accumulated wealth. Combine that with a deferred payment option (think HECS for houses, with the loan secured by the house) and I think you would have a fair system.
When you combine tiered taxes with a flat rate benefits system you get the fairest outcome - and you cut a lot of red tape. Which is a major benefit of a universal basic income. Strip out the means testing all together - give everyone basic income support, a pension once they reach a set age, pay for education, childcare etc. If you are a multi billionaire you are still going to be paying way more in tax than you receive in the pension, if your education leads you to have a higher income you will be paying it back through your increased tax, we don’t need HECS. And if you remove all of that time and money that goes into Centrelink compliance bullshit we could probably give everyone a four day working week without noticing the slightest difference in productivity.