Foreign buyer surcharge sends wrong message

 

by Hayden Groves – REIWA President      https://reiwa.com.au/

Last month, REIWA came out publicly to encourage all members of the Western Australian Parliament to oppose the foreign owner duty surcharge, which will be voted on later this year.

The McGowan Government will introduce a new property tax on foreign buyers despite an election promise of no new taxes.

REIWA has been strong in its criticism of this plan as any new property tax would deter much needed investment in the state and only serve to stifle a market that is just starting to show signs of a recovery.

With population growth in WA having slowed considerably over the last couple of years, the WA Government should be implementing policies that attract people to the state, not deterring them with additional taxes.

Aside from Darwin, Perth already has the lowest level of foreign investment and foreign students of any capital in the country. The state is also on the verge of a skills shortage and we need foreign families to fill that void. Introducing a new property tax at this time will only dampen the incentive for foreigners who are not permanent residents to relocate and live here.

For those that do come to WA, they will be inclined to remain in the rental market for the duration of their stay or until they obtain permanent residency, in order to avoid the hefty tax. In the longer term, the impact of this surcharge on foreign investment will be felt by local tenants, who are likely to face increased weekly rent prices due to lowered housing availability.

The consequences of this new tax would not be solely limited to overseas buyers either. Western Australians with foreign spouses who purchase a home together would also be affected by this surcharge, with 50% of the value of the property eligible for the 7% tax under the Government’s proposed legislation.

This new tax does not target ‘wealthy’ investors, something the government has hastened to promote. In fact, land bought to be developed into eight or more dwellings is exempt from the surcharge under the proposed legislation in its current form.

Foreign investment in our state is a positive thing. WA has a long history of migrants coming here to work and raise a family. We should be encouraging this, not deterring it with unjustified taxes.

Any short-term financial gain delivered from this kind of surcharge is likely to be counteracted by long-term losses as investors seek alternative places to invest.

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