Page 2266 - Week 07 - Wednesday, 3 August 2016
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unearned windfall gains—that is, changes in the lease conditions that are granted by government, not earned by a small business or a business or a property owner but granted by government—it is only fair that if you get a windfall gain then you pay a share of that windfall gain in taxation, because you are getting an increase in the value of your land that is entirely unearned.
The efficiency of the lease variation charge has been confirmed by numerous independent analyses. The 2010 report by economics consultants Macroeconomics noted that the LVC seeks to tax the unearned windfall gains generated by government planning decisions. The report stated:
Because this value is ‘gifted’ to the leaseholder, rather than earned, it is socially efficient and equitable that government retains a significant proportion of that windfall and uses it for the benefit of the community.
When this place grants a private business a massive increase in the value of their land, of course this place should retain some of that for the community. That is why the policy position of those opposite to allow all of the windfall gain that is granted by this place—not earned by anyone but granted by a change in planning rules—and to suggest that 100 per cent of that benefit should go to developers speaks loudly to the values of those opposite.
The question is: if it is such a bad tax, why are you not advocating its complete abolition? Why are you creating a distortion in the market by suggesting that it would only be abolished in town centres and the CBD? And how are you going to define that? What about Braddon? What about Reid? What about New Acton? What about the Phillip business district? Are they all excluded from your LVC—well, let us just say “windfall gift to developers”—through your policy?
You also need to state how you are going to replace that revenue, which, of course, currently helps fund important services for the local community. Why should developers get 100 per cent windfall gains when their lease and the value of their land are changed in a positive way by this place? If we are going to make that decision then some of that value uplift should be returned to the community. It is a fundamental principle, Madam Deputy Speaker, and one that I will never walk away from. There has to be a community benefit. What the opposition are proposing in this policy is that there would not be a community benefit; it would go 100 per cent to the developers.
In regards to taxation, households and businesses do contribute to the ACT’s own-source revenue. Outside of households and businesses, there is not a huge amount of other economic activity that can be taxed. That is the case in this jurisdiction, as it is in every other state and territory and in most other parts of the world. It is the norm; so it is not an unusual thing for the ACT. What is important is that taxes are fair, taxes are simple and taxes are as efficient as possible. Given the choice between levying bad, inefficient taxes or more efficient and fairer taxes, this government falls on the side of more efficient and fairer taxes. Those opposite want to continue to levy bad taxes—stamp duties, for example—some of the worst taxes levied by state and territory governments. That is why we are continuing our tax reform agenda.
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