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Why property taxes should be reduced.



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7 April 2000

 WHY PROPERTY TAXES SHOULD BE REDUCED

Access Economics, in a report commissioned by the Real Estate Institute of Australia, have concluded that reducing State taxes on property would provide greater economic benefits than if payroll taxes were reduced by the same amount.

Mr Stephen Francis, President of the Real Estate Institute of Australia, today released the findings of a study by Access Economics, entitled "The Economic Impact of Reducing State Taxes on Property".

"The Real Estate industry has long held the belief", Mr Francis said, "that property taxes are economically inefficient".

"With the imminent abolition of a number of State taxes, not including property taxes, in return for access to the revenue from the GST, we asked Access Economics to find out whether our belief was supported by the evidence", Mr Francis said.

"We also asked them to model when GST revenue might allow the States to consider reducing or removing other taxes".

"It is often asserted by big business that payroll tax is the major impediment to employment growth", Mr Francis said. "So we decided to test that assertion".

The report produces a clear economic case for reducing property taxes ahead of many other taxes. For example, the evidence is that the economic gains to economic welfare, GDP and investment would be significantly greater from a reduction in many property taxes than from reducing payroll tax. Similar results occur in relation to liquor and tobacco taxes, FID, BADT and petrol taxes.

"REIA has drawn the results of this study to the attention of the Prime Minister and the Treasurer", Mr Francis said.

"Each of my State and Territory colleagues have also informed their respective Premiers and Chief Ministers of the findings of the report and the real estate industry will be campaigning vigorously to have property fairly benefit from future taxation reforms".

Copies of the Executive Summary of the report will be available from 12 noon today.

For further information

Stephen Francis

Daryl Smeaton

President

Chief Executive Officer

(02) 9804 7000 (w)

(02) 6282 4277 (w)

0418 223 933 (mobile)

0413 878 081 (mobile)

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