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Monday, 19 October 2009 07:11 |
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New GAIC proposal: a wolf in sheep's clothing, Taxed Out Inc. media release, 19th October 2009
Landowners are still unfairly and adversely impacted by the Brumby Labor Government's Growth Areas Infrastructure Contribution (GAIC) draft legislation released on Friday afternoon.
The release comes four days after the closing date for submissions to the Outer Suburban/Interface Services and Development Committee Inquiry into the Impact of the State Government's decision to change the Urban Growth Boundary, denying landowners the opportunity to submit comments regarding the new GAIC proposal.
The GAIC remains payable on the first sale or subdivision of land after it is included in the Urban Growth Boundary, based on the Government's much criticized and unproven theory that all land enjoys a substantial ‘value increase' upon inclusion in the UGB.
Taxed Out's concerns have not altered despite the fact that the tax is now payable by the purchaser. Same property transaction is being taxed, so vendors are still impacted:
The tax is still applied at a flat rate ($80,000 or $95,000 per hectare) regardless of the sale price.
The tax is payable on the ‘first property transaction' after inclusion in UGB, regardless of development timelines.
The price a landowner receives when selling their property will be reduced by the amount of the tax. Certainly the tax will not be added on to the sale price as the purchaser has the obligation to pay the tax and so won't pay it twice.
Lending institutions will only lend against a property's market value, not the value plus the GAIC liability. A loss of borrowing capacity will impact both the current vendor and the purchaser.
In effect the GAIC tax freezes personal land assets until development is imminent (which could be decades away) but landowners will be hit with immediate council rate rises, leading to them ultimately becoming distressed sellers.
All landowners within the new and existing growth areas are to have a notice registered on their Certificate of Title warning purchasers that they will be liable for the GAIC tax if they purchase.
Purchasers have the option of paying the tax upfront of deferring the liability and incurring interest on the tax which is also indexed annually. The tax will therefore grow at a compounding rate the longer it is deferred.
"How can anyone on small acreage attract a purchaser with that sort of liability attached? Certainly no family wishing to live on a few hectares will take on this added liability when they can purchase property outside the UGB without this headache. That leaves only developers in the market. When you remember development in the investigation areas will not commence until 2019 even developers will not be interested in property for ten years. This will destroy the value of these homes which are predominantly held by families and the elderly," says Mr. Hocking, chairman of Taxed Out Inc.
Taxed Out maintains that the only fair and equitable trigger point for the tax is the granting of a planning permit for development.
The group also maintains that the Government's justification for charging the GAIC on the ‘first property transaction' - the theory that all land enjoys a substantial ‘value increase' upon inclusion in the UGB - is fundamentally flawed and intends to expose these issues when it appears before the OSISDC Parliamentary Inquiry at 11.30am on Thursday 22nd at Parliament House.
Taxed Out Inc. will meet with the Planning Minister Justin Madden this afternoon to address these matters directly.
Media contacts:
Michael Hocking 0400 248 099
Jeanette Laffan 0438 452 641
Nola Dunn 0421 108 007
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