NSW Refusing to Play Ball on Queensland’s Contentious Extra-Territorial Land Tax

NSW Premier Dominic Perrottet addresses media at Smalls Road Public School in Sydney, Australia, on June 22, 2022. (AAP Image/Dan Himbrechts)

New South Wales Premier Dominic Perrottet has ruled out cooperating with Queensland state authorities to help roll out its contentious extra-territorial land tax.

In a nation first, the Queensland Labor government’s proposal will calculate the amount of land tax owed by an investor based on their total property holdings across the country, instead of what they own in the state.

For example, if an individual owned 10 properties around Australia and they were to buy just one in Queensland, the government would charge land tax based on an aggregated valuation of all the properties added together.

The move has drawn a sharp response from property groups who warn it could drive away investors from the state, particularly as Queensland undergoes a severe rental crisis—properties provided by investors are a major pool of housing for renters.

On Sept. 26, Premier Perrottet said he would block attempts from Queensland to access housing ownership data in New South Wales (NSW)—the country’s most populous state.

“This is a tax implemented by a state that impacts the residents of NSW,” he said, in comments obtained by AAP. “It is wrong and we are not going to comply with it, so we are not going to provide that information.”

The premier said his Liberal government would test the constitutional validity of the new land tax.

“This is a retrospective tax,” he said. “Some of those investors would not have been paying any tax at all because of the way they structured those investments.”

Plenty of Groundwork Left to Be Done

One of the key challenges for the Queensland government’s new scheme is compiling and identifying what properties individuals may own across the country—each jurisdiction runs its own land registry with little crossover.

Currently, the government will rely on an “honesty” system where individuals complete a declaration of their landholdings, while an additional nine employees will be hired to implement the scheme.

Queensland’s deputy under treasurer, Leon Allen, has previously conceded that no existing arrangements on sharing data existed and the success of the policy would be “highly dependent” on what information could be obtained.

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Queensland Treasurer Cameron Dick meanwhile has responded to Perrottet’s comments saying it was motivated by the upcoming state election.

“Dominic Perrottet is making these statements today because he’s six months out from an election, he’s tanking in the polls and it’s an election that he’s likely to lose,” he told reporters in Brisbane on Sept. 27.

No Solution in Sight for Housing Crisis

The treasurer has framed the policy as closing a supposed loophole in the tax system and that it would stop competition with local buyers. His government claims the move will generate an additional $20 million a year and impact only 10,000 landholders.

The government has recently hosted a Housing Summit to drum up ideas to deal with the rental crisis—current vacancies have dropped to under one percent. Most recently, it has lifted restrictions around renting out granny flats to non-relatives.

State opposition leader David Crisafulli has responded to the new land tax saying it will hamper the appetite for investors to look towards Queensland.

“Think about what this does to the psyche of somebody wanting to invest,” he told 2GB radio on Aug. 30. “The last thing we want is for the people who have already invested in Queensland to sell.”

It is estimated around 36 percent of Queenslanders rent.

Economist Robert Carling of the Centre for Independent Studies said it has taken the Queensland government 70 years to close the so-called “loophole.”

“State land taxes have never, in the more than 100 years they have existed, taken into account anything other than land values within each state. So if there was a ‘loophole,’ Queensland was pretty slow to do anything about it,” he wrote in The Epoch Times.

“Queensland’s land tax increase is imaginative. It’s just a pity they are not as imaginative in finding ways to control state government spending.”