Land tax reduced as Rann eyes polls

8 February 2005

South Australia's Rann Government has offered the first cut to spiralling land taxes in more than 10 years, in a move that will save 120,000 landowners $245million over four years.

Amid rising backbench disquiet and a slump in the Government's support in the polls, Treasurer Kevin Foley yesterday abolished land tax on properties worth less than $100,000, raising the threshold from $50,000.

Home owners with property valued at $400,000 will have their land tax reduced to $1100 from $2525, while properties worth $700,000 attract the biggest cut - to $4625 from $7475.

Mr Foley described the revised land-tax regime, backdated to January 1, as "flatter", saying it would leave every land-tax payer better off.

He said the reforms reflected the fact that South Australia's property boom had delivered a large spike in land-tax bills.

"It was clear that the right thing to do, the decent thing to do, would be to hand back a significant amount of these taxes.

"The Government has been working hard in recent months to construct a more equitable land-tax system and we believe today's announcement achieves that goal."

But Land Tax Reform Coalition leader John Darley said he was disappointed the threshold was not higher.

"We asked for a threshold of $150,000, which is equal in real terms to the threshold in 1994 before the then Liberal government raised it," he said.

Mr Darley, a former South Australian valuer-general, said that from July 1 the Government would raise the valuations on many coastal, suburban and inner-city properties by up to 25 per cent, reducing the extent of the land-tax cut.

Premier Mike Rann said the changes stemmed from a roadside meeting with landowners in the inner-city marginal Adelaide seat of Norwood, held for Labor by Vini Cicarello, in late November.

"Vini's constituents told me the spike in land tax was hurting and asked for help," Mr Rann said.

The following month a Newspoll showed that primary support for the Government had slumped to the same level as that for the Liberal Opposition, while the Opposition took the lead in two-party-preferred terms.

Opposition Treasury spokesman Rob Lucas said the "embarrassing" land-tax cut was designed to protect the marginal seats of the minority Labor Government, which governs with the support of independents.

"They know some of their marginal seat members are in trouble," Mr Lucas said.

The Real Estate Institute of South Australia welcomed the reform, saying it was particularly helpful for small investors and families with a holiday home.