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The Impact on the Land Cycle from increased Land Taxation - no winner's curse? Prices/rents up or down?

When Victoria’s land tax threshold was reduced, resulting in an estimated 380,000 additional real estate owners paying the levy it sent shockwaves through the industry.  

Land tax bills have doubled in some cases. Understandably, it’s marked Victoria as one of the least favourable states for property investors.

The levy was demonised as an assault on hardworking ‘mum-and-dad’ investors, with property advocates suggesting that vacancy rates would continue to fall, and rents continue to rise.

However, the taxes have fallen solely on the shoulders of the landowners and have not been transferred onto tenants at a whim.

If it were even possible, I doubt landowners would be howling. The higher taxes would be of no consequence.

Instead, the land taxes have had the marginal effect of lowering land prices (all else being equal) as new purchasers take the higher tax rates into account when assessing their budget for new sites.

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