Australia - land and property tax system - Statistical Data Included

American Journal of Economics and Sociology, The, Dec, 2000 by Geoffrey A. Forster

GEOFFREY A. FORSTER [*]

THE COMMONWEALTH OF Australia is a federation which was established on January 1, 1901. It consists of six states, all previously separate British colonies--New South Wales, Queensland, Victoria, South Australia, Western Australia, Tasmania--and the sparsely populated Northern Territory which now has a territorial government elected by its own citizens. The total area of the Commonwealth is 2,974,581 square miles. At the time of federation, the designation of "colonies" was changed to "states" for all but the Northern Territory, which retained its original designation.

The Commonwealth also includes the 940 square miles of the Capital Territory in which the national capital, Canberra, is located, and which also has a locally-elected government.

There are three levels of government in Australia, and three levels of financing: federal, state, and local (municipal, shire, borough, etc.). In Australia, federal land tax was abolished early in 1952; reasons alleged for this vary. All states have a state land tax, but with variations in implementation. They all have varying exemptions and gradations. Finally, at the local government level, municipal property rates may be based on site-value only, or else or equally on the value of the site and its improvements (capital improved value or net annual value), or occasionally on a "shandy" system--a mixture of two. In recent years, in most states, there has been a tendency to weaken site-value rating, e.g., by supplementing or replacing it with fixed charges for specific purposes.

The main functions of local government in Australia are to provide and maintain roads, street lighting, rubbish collection and disposal, maternal and child health care centers, libraries, and recreational facilities. It may also subsidize certain educational and counseling services, although education is not regarded as primarily a local responsibility. Nor is public security. Some local functions are supported, not through property taxation, but through user charges.

Historical Development of Land-Value Taxation

SOME AUSTRALIAN MUNICIPALITIES were rating on unimproved land values as early as the 1850s. But as a result of the impact of Henry George's writings, single-tax leagues, as they were often called, began proliferating about 1890. The concept was spread by such able and energetic advocates as Max Hirsch, who abandoned a successful career in commerce in order to do so. George's three-month speaking tour in Australia in 1895 accelerated this trend. Its growth was halted by the outbreak of World War I, and from then on, exacerbated no doubt by the welfare state, a decline in the number and membership of the leagues set in.

Almost from the beginning, some land value capture for public benefit in Australia has been obtained through the leasing out of Crown lands (i.e., public lands once owned by the British Government and now by the Commonwealth).

A graduated federal land tax was introduced in 1910, with the stated intention of breaking up the large estates. The first [pound]5,000 of unimproved value was exempt, and the rates were low except for very large estates, the owners of which frequently escaped the tax by nominally subdividing them among family members.. As mentioned above, it was abolished in 1952.

State land taxes were introduced into the six states in the following order: South Australia, 1884; New South Wales, 1895; Tasmania, 1907; Western Australia, 1907; Victoria, 1910; and Queensland, 1915. They vary considerably, apply only to certain properties, and suffer from serious administrative defects.

By far the most important are the local land taxes or "site value rates." All six states permit their adoption by local option; Tasmania is the only one in which no jurisdiction has availed itself of this choice, although strong efforts have been made there to promote it. Its use began in New South Wales and Queensland in 1890, and is universal in both states; in Western Australia it began in 1902, and is predominant there. In South Australia and Victoria net annual value rating is predominant, but site value rating has existed in the former since 1893, and in the latter since 1919.

Canberra, the national capital city, which now covers most of the Australian Capital Territory (transferred to the Commonwealth by New South Wales), was established in the late 1920s on a leasehold system, involving a rental payment to the federal government. After the site was chosen for the capital territory in 1909, an international competition to plan the city was won by a Georgist, Walter Burley Griffin of Chicago, for whom Canberra's central lake is named. The leasehold system applied to the entire ACT, not merely to the city. Although 99-year leasehold remains nominally in effect, it became for all practical purposes a "dead letter" when payment of residential leasehold rents was abolished by then-Prime Minister John Gorton on January 1, 1971, a move intended, according to his opponents, to rally public support for his reelection. "It was estimated that the government transferred 100 million Australian dollars in equity to lessees at that time, resulting in the loss of an important source of revenue." ' However, site-value rating, which was introduced in 1927, continues throughout the territory. The history of Canberra's land tenure system is presented in an excellent book by Frank Brennan, Canberra in Crisis. [2]