Housing affordability squeezed by speculators

An effective land policy would see a holding charge on all land. A reformed Land Tax, in the name of a Site Rental, would be implemented at a flat rate. Land could no longer be withheld from the market to manufacture capital gains.

Unfortunately the elegance of such a shift is constantly shot down by property-based think tanks. Between October and January 2007 more than 70 per cent of press releases from the Real Estate Institute of New South Wales criticised Land Tax, the only charge the super wealthy can’t avoid, the only charge to ensure land is used efficiently.

The transferring of taxes off productive work and onto resources would give a significant improvement to small business, simplifying compliance costs and curtailing the use of tax havens. Reward for effort would be encouraged over reward for speculation.

An example is 62- 64 Geelong Rd, Footscray. The property was bought for $510,000 in 2000. Just seven years later it was sold for $970,000. What did they do? Nothing - the property was left vacant. Are such paper shuffling profits justified? Should they be supported with low capital gains and negative gearing? Should they pay less tax than the lowest wage earners? Leaving a vital resource vacant for such a period of time is akin to a union demanding a four-hour lunch break.

Why should working class people pay taxes to fund infrastructure and improved government services when the benefits are captured in higher land prices, leading to higher rents? This is the cause of the wealth gap.

Land policy must be corrected to deal with the twin troubles of the wealth gap and climate change.