Study strengthens case for reducing property taxes

May 2000

Reducing State taxes on property would provide greater economic benefits than if payroll taxes were reduced by the same amount.

That's the view of economic think-tank Access Economics, which recently completed a detailed study into Australia's taxation regimes.

The report produces a clear economic case for reducing property taxes ahead of many other taxes.

For example, the evidence is that the economic gains to economic welfare, GDP and investment would be significantly greater from a reduction in many property taxes, rather than from reducing payroll tax. Similar results occur in relation to liquor and tobacco taxes, FID, BAD and petrol taxes.

Real Estate Institute of Australia President, Mr Stephen Francis, said the real estate industry had long held the belief that property taxes are economically inefficient.

"With the imminent abolition of a number of State taxes, not including property taxes, in return for access to the revenue from the GST, we asked Access Economics to find out whether our belief was supported by the evidence," Mr Francis said.

"We also asked them to model when GST revenue might allow the States to consider reducing or removing other taxes."

"It is often asserted by big business that payroll tax is the major impediment to employment growth."

"So we decided to test that assertion."

REIA has drawn the results of this study to the attention of the Prime Minister and the Treasurer while each State Premier and Treasurer is being targeted by State-based Institutes.