Annual Report

Land value taxation: opportunity and challenges for funding regional Australia and New Zealand

31 Oct 2018

Australia and New Zealand have highly centralised tax systems and are low taxing countries, they are both in the bottom quartile of Organisation for Economic Co-operation and Development (OECD) countries in tax collection effort as a percentage of Gross Domestic Product (GDP). A common fiscal reform stemming from national tax reviews in Australia and New Zealand recommend improving tax effort from recurrent land value taxation. This paper examines the status of the administration of recurrent land and property taxation, how it has evolved and how it might be reformed in achieving additional revenue that would benefit regional New Zealand and Australia. A simulation approach is used to examine how land value is determined and define the factors that have resulted in the transition to alternate bases of value, used by local government in parts of Australia and New Zealand, to assess council rates. The paper finds that while challenges exist in the determination of value in highly urbanised locations, a codified approach can be used to create a uniform basis of value on which land may be taxed. The paper concludes that challenges confronting the determination of land value should not deter an impost on land and that land is a base among other forms of taxation that may be equalised to assist funding in regional Australia and New Zealand.

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