Michelle Bennett, KPMG State Taxes Partner, said:
“The NSW Government’s decision to impose a 4% duty and 0.75% land tax surcharge follows the other Eastern Seaboard states in introducing property surcharges. It will be interesting to see whether, like Victoria, this is a soft start to be followed by rapid hike in the rate.
Taxing foreign property investors may be good politics – raising revenue without disenfranchising anyone with a vote - and is projected to raise $1billion in additional revenue over 4 years. The unknown is whether this will translate to good economic and social policy. The Government’s assertion that it will not impact the appetite of foreign investors would seem to refute any suggestion that the measure has a secondary policy agenda of reducing the oft-cited impact of foreign investors on housing affordability.
The concern is that it could increase the cost of housing or reduce the supply of new housing for Australians by increasing the costs for developers and reducing vital markets – particular the pre-sales market directed to foreign investors which can be vital for securing project funding and enable construction.
Australia needs to take care that we don’t create a perception that we are hostile to foreign investment.”
Senior Communications Manager, KPMG
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