Your erudition is impressive, Mr. Kavanagh! Perplexing though is that you make a living out of real estate exchange and your business is a determinant of what you coldly call Global Financial Crisis.

You are at one with the army of estate agents who under the command of the ‘Real Estate Institute of Australia’ constitute the greatest burden that has pushed and, unabated, continues to push this country into Financial, Cultural, Social and Moral decline.

You are at one with the bureaucrats of the Australian Competition and Consumer Commission to whom nobody has yet told who pays their salaries and why.

You are at one with the prevailing political corruption that pervades every institution we depend on.

You are at one with the media barons who continue to make packets serving the property speculators.

You are at one with the bankers who care little of what their profit making cause to all of us.

Mr. Kavanagh! If estate agents had continued in their independent business, and Monopoly of service had been denied to the Real Estate Institute, could they have driven us into the present degree of homelessness?

Can you imagine, Mr. Kavanagh, what this army of estate agents that for thirty years have wasted their energies wrapped in expensive suits, driving luxury cars and pushing old people from their home into a bank account could have done to their life and to the life and people of Australia, if they and you had worked in productive jobs?

They and you would have spent a saner and more rewarding time and this country would have been a fair one.

"rehctub" wrote:

"... if a property is purchased and not producing an income, then there are no allowable deductions..."

Wrong. You can claim negative gearing on a vacant property as long as you pretend that it's available for rent. The 50% discount on capital gains is even easier to get.

"rehctub" then defends land bankers as if the availability of land depended on them, when in fact the land existed before land banking was invented and will continue to exist if every land-banker goes belly-up. Why does the land have to be banked? Why can't it simply pass from one use to another? Why shouldn't developers be rewarded simply for development? It doesn't, it can, and they should.

Land banking, if it has any effect at all, is just another example of locking up land.

"skeptic": Your diatribe against Mr Kavanagh proves only that you don't know the difference between a real estate AGENT and a real estate VALUER.

As a valuer, I carry no brief for real estate speculation or land monopoly, Sceptic. For that matter, I'm not sure that all real estate agents are as you paint them, either. The problem lies with a tax system that fines doers and rewards speculators.

You seem to miss the point that if we were to revolutionise the tax system by a switch in emphasis from taxes on productivity, employment and thrift to the holding of land - by higher taxes on land values - we might finally put paid to these repetitive real estate bubbles that inevitably lead to recession.

IMO, we'd also arrest the drift to the big cities that was mentioned earlier. As the annual land value tax (LVT) payable would be lower in regional cities and towns, we might actually reverse the drift, in much the same way that Tasmania recently attracted population growth during the bubble by having relatively cheaper land prices than most mainland locations. An annual LVT would greatly emphasise this effect.

With LVT as a more significant revenue base, the government would find it had a far greater commitment to infrastructure projects which it could fund by capturing more of the increase in land values that these projects would endow. It's quite wrong that private interests are currently allowed to capture virtually all of these publicly-funded uplifts in land value.

WTF?
grputland’s link refers mainly to a turnover tax – this is essentially a GST and not a debit tax.

grputland’s link also reveals this little gem; “a debit tax encourages further avoidance techniques such as paying cash, avoiding purely financial transactions, and processing transactions through offshore financial institutions.”

Just as well the GST did away with paying cash for goods and services – no cash economy now.

Barter systems do exist as a fringe economy – always has always will.

It’s 2010 – the computer age – legislate against the use of offshore financial institutions as a tax avoidance measure.

grputland link takes us to an article that he is the author of and implies that he is therefore a “mainstream economist” - which he is not

Dear "WTF",

You mentioned debit tax. "rehctub" mentioned turnover tax as if it were the same thing. My article (http://www.prosper.org.au/2005/11/07/critique-of-the-debits-tax-and-turnover-tax/ ) mentions both and explains the difference. What's the problem?

In any case, a turnover tax differs from a GST in that the former taxes turnover and the latter taxes value added. Both enter into prices, but in different ways, with different distortionary effects.

My article does not suggest that the GST does away with the cash economy. It mentions the GST only once, and only in connection with the influence of tax on prices.

However, the article DOES use arguments that mainstream economists would use. That's why I mention mainstream economists. Introducing the article with a put-down like "...even mainstream economists understand..." makes it sufficiently obvious that I am not myself a mainstream economist -- unless you are determined to misrepresent me any which way you can.

And while it may be possible to "legislate against the use of offshore financial institutions as a tax avoidance measure," there is no need to legislate against exporting land as a tax-avoidance measure.

grputland >>
Wrong. You can claim negative gearing on a vacant property as long as you pretend that it's available for rent. The 50% discount on capital gains is even easier to get.

You simply can't rent a 'vacant house block' and, considering your comment was aimed at 'housing affordabillity', this must be the type of land used as a reference.

As for 50% CG discount. There are no secrets there.
>>rehctub" then defends land bankers as if the availability of land depended on them

Land banking is a term used by developers which essentially involves the purchasing of large areas of land, then waiting until progress allows for 're-zonning'. Usually requires 'large kahoonas'.

The problem today is that nobody can predict what changes our 'cash strapped governments' will make tomorrow, let alone in five or ten years time.
Furthermore, many developers prefer to buy land with 'DA's in place', hence, the rising costs of developed land, as thier acquision costs are much higher.

>>Why does the land have to be banked?
Refer to the above.

>>Land banking, if it has any effect at all, is just another example of locking up land

You are very ill informed.

>>rehctub" mentioned turnover tax as if it were the same thing

Wrong, I mentioned a 'transaction tax', which is a tax impossed on all financial transactions, they being, any 'debit/credit' into a financial institution.EFTPOS included. Nothing like a GST.

Now as for the GST, well, this tax actually strengthened the 'cash ecconomy' as many tradies, rather than doing a job for less for cash, simply deduct the GST which means less need for negotiation on thier part.

Now if the average punter could claim the GST, or at least a reasonable portion of it on all repairs to their home/appliances/car, I think this would do away with most of the 'cash ecconomy' and force many of the 'dodgy tradies' to pay taxes, both income and the GST.

Who knows, we may be better off in the long run.