"They've given up on wanting to keep the community happy"

Several economists have voiced their apprehension toward announced changes to Queensland’s property tax scheme, pointing to how the new rules could reduce home values and increase rents.

The Queensland government had recently passed legislation that will change how property tax is calculated. Starting June 2023, this calculation will include the value of properties owned in other states, effectively increasing the amount that interstate investors will have to pay.

This means an individual who owns property in Queensland worth $745,000 and another in Victoria worth $1,565,000 would see their land tax increase by $1,950 to $8,422, according to a report by the Australian Financial Review.

University of NSW economics professor Richard Holden said that such an increase amounts to “double taxation,” as it would bump interstate investors to higher tax brackets while already paying land tax in other states. He also pointed to how the new tax scheme would affect the Queensland property market, noting that the move will likely reduce home prices and limit new housing supply.

“To do something which could crater the interstate investment market in order to lower prices so that existing owners are worse off to try and make it easier for first home buyers, it’s a pretty odd way to try and increase housing affordability,” Holden told the AFR.

Real Estate Institute of Queensland chief executive Antonia Mercorella, meanwhile, called the new tax laws “illogical” as she explained how it will increase commercial rents and exacerbate the current rental crisis in the state.

“There’s no other state or territory that charges state land tax based on the value of properties held across Australia and outside the jurisdiction where the tax is collected,” she said. “It’s unprecedented and unheard of for a reason. This will likely send commercial rents through the roof, and given this tax is only triggered by Queensland property holdings, it sends the message to businesses to shut down shop and set up elsewhere to get the monkey off their back.”

Harsher words were shared by Adept Economics director and former federal Treasury official Gene Tunny, referring to the tax changes as a “revenue grab.”

“This is real anti-business and I think they’ve given up on wanting to keep the business community happy in Queensland,” he told the Australian Financial Review. “It’s all part of trying to sneak in some operating budget surpluses towards the end of the four-year forward estimates.”

For the government, the changes are a “sensible” plan to close an existing tax loophole.

“Currently, interstate investors who own properties across several states can access the tax-free and progressive rate thresholds multiple times, depending how many states they own property in,” spokesman for Queensland Treasurer Cameron Dick told the Financial Review. “This sensible, prudent reform means interstate investors get treated the same as Queensland investors, wherever they live and wherever they own property.”