Could a 'mansion tax' help the housing crisis?

Australia is exploring the concept of a "mansion tax" as a potential solution to its housing crisis, a policy that has seen varied success in other countries. With significant proposed changes to the nation's tax system and years of rapidly increasing home prices, a leading expert suggests the idea is "worth considering."

“

We're taxed enough, and then we get no benefits. I think we're penalized enough for working hard and saving our money.

The suburb of Bulimba in Brisbane, known for its high property values with a median house price exceeding $2.3 million, could be significantly impacted. Residents like Annette Wilkins, a retiree, express opposition, feeling they are already "taxed enough" and "penalized for working hard." Kasey Drake, another resident, believes the tax wouldn't curb housing growth, attributing price increases to population needs and demand from first-home buyers.

“

The house prices keep growing because we have a growing population with needs. A lot of young first home buyers need to get into the market.

However, the idea garners support from others. Local retiree Ian views it as a "great idea," questioning why owners of expensive homes shouldn't contribute more tax. The implementation could take two forms: a threshold tax applied to the sale of properties above a certain value, similar to models in Los Angeles and New York, or an annual tax on the unimproved value of a property exceeding a set threshold, a system slated for rollout in the UK in 2028.

“

I think it's a great idea. If you live in a $5 million home, why not pay some tax?

Robert Breunig, Director of the Tax and Transfer Policy Institute at the Australian National University, advocates for the latter approach, calling it "the better way." He highlights that a significant portion of Australia's wealth is tied up in owner-occupied housing, which remains largely untaxed. This perspective aligns with previous proposals from the New South Wales Greens for an extreme wealth property tax and Queensland Labor's endorsement of a luxury homes levy.

“

If you look at where the wealth is held in Australia, about 50 per cent of it is held in owner-occupied housing, that is, houses that people live in, and that wealth is essentially not taxed.