You’ve probably read the government is considering raising the GST.
And in my mind, considering the level of our GST is amongst the lowest in the world, this is likely to happen.
So how will this affect property values?
Well…increasing the GST by just a few per cent could result in tens of thousands of dollars in additional tax on new homes, which would push up prices further and reduce the supply of new dwellings according to the Urban Development Institute of Australia (UDIA).
The UDIA is urging for a major shakeup of Australia’s tax system
UDIA National President Cameron Shephard said that given the challenges facing the economy, government budgets, and housing affordability, Australia could not afford inaction on tax.
“A great deal of Australia’s economic potential is being held back and squandered by a tax system that has failed to keep up with the times,”
“Inefficient taxes and charges are dragging on economic growth and productivity, holding back jobs, and worsening Australia’s housing affordability crisis.
“For example, stamp duties are well known to be among the least efficient and most economically damaging taxes available to governments, and there is a strong and growing consensus across the community about the need for governments to replace them with something better,” said Mr Shephard.
“They reduce labour mobility and productivity by locking people into a certain location, and along with other high up-front taxes and charges, reduce housing affordability and the supply of new housing.
“In contrast, the GST and taxes on the value of land are widely recognised as being much more efficient from an economic perspective, particularly when applied across a broad base.”
But don’t raise the GST
However UDIA has strongly warned against raising the rate of the GST, which could raise the cost of new housing substantially at a time when housing affordability is a major concern.
Mr Shephard said:
“Increasing the GST by just a few per cent could result in tens of thousands of dollars in additional tax on new homes, which would push up prices further and reduce the supply of new dwellings.
“Now, more than ever before, Governments need to get serious about tax reform, and having a productive discussion with business and the broader community over the options for change is the first part of that process,”