The 2017 Western Australian State Budget left property taxes alone, but introduced a new 4 per cent foreign-owner duty surcharge.
The McGowan Government has listened to the concerns of the Western Australian property industry and did not change property taxes in the 2017 State Budget.
The treasurer, the Hon Ben Wyatt MLA, said the state government did not consider increasing property taxes for Western Australian residents as a budget repair measure, recognising the impact of the three consecutive land tax increases in previous budgets.
REIWA deputy president Damian Collins welcomed the decision.
“REIWA welcomes the state government’s commitment to keep property taxes on hold for WA residents, and whilst some of the reforms we recommended were not addressed in the Budget, we appreciate the current fiscal position,” he said.
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The four per cent foreign-owner duty surcharge
The Western Australian government plans to introduce a four per cent foreign-owner duty surcharge from 1 January 2019. This measure is expected to raise $49 million by 2020-21.
Collins warned foreign investors should not be further discouraged.
“Despite foreign investors only representing a small proportion of the Western Australian property market, caution must be placed to ensure this section of the market does not reduce further.”
Collins warned that even though the Western Australian government expects to raise revenue from the surcharge, transfer duty revenue may actually decline if foreign investors are discouraged from buying residential property in Western Australia.
In its pre-budget submission, REIWA recommended the government:
- Make no further changes to rates or thresholds for land tax.
- Don’t increase transfer duty rates or change thresholds.
- Undertake a state tax review to assess the viability of a shift to a broad-based land tax system that ultimately removes transfer duty.
- Maintain the existing transfer duty exemption for first home buyers at $430,000 and re-introduce the $3,000 First Home Owners Grant for existing dwellings.
- Introduce a $10,000 concession on transfer duty for seniors over the age of 65 to encourage ‘right sizing’.
Stronger economic growth in Western Australia is predicted
The State Budget revealed that Western Australian economic growth is expected to recover from 0.25 per cent in 2016-17, to three per cent in 2017-18.
Employment growth is also forecast to recover, with nearly 20,000 jobs expected to be created in 2017-18, attributed to a modest increase in population growth.
(SOURCE: The Real Estate Conversation)