The Herald Sun is reporting a tax ?outrage?.
HOMEOWNERS are being hit with spiralling rates as councils value their properties at up to double their market worth.
Some bills have increased by more than $2000 this year, with councils set to rake in millions of dollars extra in rates revenue.
Values placed on many houses across Victoria are significantly higher than the prices estimated by banks and real estate agents.
Okay ? so what is going on?
Ratepayers Association of Victoria president Jack Davis said the problem was widespread, particularly in rural councils that were targeting blocks of land.
?If you?ve got a block of land that could fit six units on it, you?re rated on the basis of six units,? he said.
Important to realise that is a feature and not a bug. That is how land tax is supposed to work. Therein lays the fundamental problem with land tax.
In any taxation system the government defines the tax base and sets the tax rate. In the case of land tax, however, the government also provides an estimate of the value of the tax base. That estimate of value is not entrepreneurial but bureaucratic. To be sure those bureaucrats make use of (more or less) complex valuation tools and I have no doubt they do the best they can under the circumstances. The fact remains, however, that the valuation is artificial. The property owner pays tax on what a bureaucrat thinks the best value for the property might be, not the current property owner or potential property owners. There may be a good reason why individuals don?t knock down their houses and build six units on the land or sell their property to someone else who will knock down the house and build six units.
One solution to this problem is to convert any property valuation into an offer for purchase. So when you receive your rates notice the council should be making an offer to purchase your property that the valuation they have estimated.
Source: http://catallaxyfiles.com/2012/11/19/land-tax-woes/
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