10 May 2010
The NSW Government has today changed the law to permit a new “super tax” on urban development, according to the Urban Taskforce.
The levy will add 4 per cent to project costs and is supposed to raise up to $187 million, Mr Gadiel said.
“The levy will apply to all urban development exceeding $250,000 in cost, including new homes and commercial office development.”
Mr Gadiel said that councils currently have the power to impose a percentage-based levy on development, but outside of six regional cities this levy has always been capped at one per cent.
“This is an unheard of revenue grab by a suburban council,” Mr Gadiel said.
“It is the highest percentage development levy in Sydney and means that Burwoods development charges will exceed those of the Sydney CBD (1 per cent), Parramatta CBD (3 per cent), Liverpool CBD (2 per cent), Wollongong CBD (2 per cent) and Newcastle CBD (3 per cent).
“This new levy will delay serious urban renewal around the Burwood town centre.”
Mr Gadiel said that the levy was not a genuine effort to recover the costs of infrastructure essential to the renewal of the urban town centre.
“There is no requirement for money raised to be spent on infrastructure required for new housing and workplaces.
“This levy is pretty close to a straight-out tax.
“The one per cent cap waived by the NSW Government today – was imposed to ensure these charges do not get out of hand.”
Mr Gadiel said the levies of this kind were attacked in the Henry Tax Review released just last week.
The review criticised levies that were complex, non-transparent or set too high and said they discourage investment in housing, lower the overall supply of housing and raise its price, he said.
The review also criticised levies that tax the profit of development rather than reflecting the true cost of infrastructure necessary for development to take place. This is nothing more than a state government imitation of the new federal super tax on the mining industry.”
Bankstown and Willoughby councils are both also seeking to waive the one per cent cap.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
The construction activity made possible by property developers contributes $78 billion to the national economy each year and creates 849,000 direct jobs.
