Land Tax
General Relief – Adjustment to Land Tax Scale
According to a preliminary indication by the Valuer Gerneral’s Office unimproved land values will increase by an estimated 49% in the 2007-08 land tax assessment year. The current land tax system has a highly progressive structure and accordingly without a change in the tax scale the increase in revenue from land tax would be much greater than the forecasted increase in land values. To a lesser extent the same can be said of the Metropolitan Region Improvement Tax (MRIT).
In response the Government has adjusted the land tax and MRIT scales for the 2007-08 assessment year (see below). This adjustment is comprised of a substantial stretching of all tax brackets and a reduction in three of the five marginal tax rates. Correspondingly the MRIT threshold has been increased so as to coincide with the land tax exemption threshold; the MRIT and land tax thresholds have both been increased to $250,000 in 2007-08 from $150,000 in 2006-07.
The 2006/07 and 2007/08 scales, along with the tax payable for a sample of land values are detailed below:
| LAND TAX SCALE | |||||
|---|---|---|---|---|---|
| 2006-07 Scale | 2007-08 Scale | ||||
| Unimproved Value of Land |
"Base" Tax on Threshold |
Marginal Rate on Excess |
Unimproved Value of Land |
"Base" Tax on Threshold |
Marginal Rate on Excess |
| $'000 | $ | % | $'000 | $ | % |
| 0 - 150 | Nil | Nil | 0 – 250 | Nil | Nil |
| 150 - 390 | Nil | 0.15 | 250 – 875 | Nil | 0.15 |
| 390 - 875 | 360 | 0.45 | 875 – 2,000 | 938 | 0.75 |
| 875 – 2,000 | 2,543 | 1.62 | 2,000 – 5,000 | 9,375 | 1.30 |
| 2,000 – 5,000 | 20,768 | 2.30 | 5,000 – 10,000 | 48,375 | 1.55 |
| Over 5,000 | 89,768 | 2.50 | Over 10,000 | 125,875 | 2.30 |
| METROPOLITAN REGION IMPROVEMENT TAX | |||||
|---|---|---|---|---|---|
| 2006-07 Scale | 2007-08 Scale | ||||
| Unimproved Value of Land |
"Base" Tax on Threshold |
Marginal Rate on Excess |
Unimproved Value of Land |
"Base" Tax on Threshold |
Marginal Rate on Excess |
| $'000 | $ | % | $'000 | $ | % |
| 0 - 150 | Nil | Nil | 0 – 250 | Nil | Nil |
| Over 150 | 225 | 0.15 | Over 250 | Nil | 0.15 |
| LAND TAX PAYABLE | ||||
|---|---|---|---|---|
| Land Value | 2006-07 Tax Payable |
2007-08 Tax Payable |
Saving | |
| $100,000 | Nil | Nil | Nil | |
| $200,000 | $75 | Nil | 100% | |
| $300,000 | $225 | $75 | 67% | |
| $400,000 | $405 | $225 | 44% | |
| $500,000 | $855 | $375 | 56% | |
| $750,000 | $1,980 | $750 | 62% | |
| $1,000,000 | $4,568 | $1,875 | 59% | |
| $2,500,000 | $32,268 | $15,875 | 51% | |
| $10,000,000 | $214,768 | $125,875 | 41% | |
| $25,000,000 | $589,768 | $470,875 | 20% | |
The above land tax adjustments are consistent with the recommendations of the State Tax Review to "flatten the scale" as a means of moderating bracket creep and undertake ad hoc changes to the scale and inequities of aggregation.
This data has been reproduced by REIWA from the 2007/08 State Budget Papers.