South Australia is burdened with the highest unemployment rate out of all the Australian states.
It also had a sluggish economy, and its property market drags its heels like a sulky kid who dropped his ice-cream.
But a few years ago the South Australian government conceived of a plan to change all that. It's been slowly phased in over the last year or so and sometime this year it will be in full effect.
The SA govt has bravely gone where no other state government has been willing to go.
They have tackled one of the most ridiculous, grabby and market slowing taxes the ATO ever implemented.
Yep – south Australia realised that this no-holds-barred blatant money grab is putting the brakes on industry, business and investing. Since these categories are the biggest employers, this move is designed to boost the commercial sector.
Before you get all excited, you've got to know that this is only for commercial, stamp duty on your home or next residential investment property will remain unchanged.
But I imagine that it will bring much more investment money into the state for commercial property opportunities.
I've noticed that commercial is still quite slow there.
It's almost like people are holding off, awaiting July 2018 when the tax will be dropped altogether for commercial properties.
After all – if you had two commercial properties to choose from at $1m but one of them gives you “cash-back” to the tune of $48,830, the difference is at least going to give you “pause” right?
I can think of at least 10 things I could do with $48k that are better than giving it to the tax office… At LEAST 10 😀
Of course, the big question is: will the other states follow suit?
Of course, there are mutterings.
Industry figures in NSW called on the NSW government to leave negative gearing alone and abolish stamp duty instead.
Personally, that sounds like a great idea.
I wouldn't touch negative gearing with a 10ft barge pole, but I could do with a drop in stamp duty quite happily.
I'd say there are two chances of that happening though…
Given that abolishment of stamp duty is designed to boost property sales in South Australia, dropping it in the other states should have the same effect, and I'm not just talking about commercial.
I'm no economist. I don't know how these things work, but I can tell you this:
A few years ago I heard of a forward-thinking group of around 200 high-level lawyers, accountants and economists.
This brains-trust came up with a tax system where ALL income tax would be done away with.
In its place was a system where the govt would receive 1% of any transaction over $100.
Smart right? Those who spend more – pay more.
The cool thing was that they estimated that this new tax system would raise 3 x the current system…
Without the dreaded paperwork
Fair for everyone
More streamlined and easy to understand.
These ideas were presented to the powers that be… And summarily rejected.
It's not easy to get a lot of information about this system and its inventors, but it is clear to see that there are other things at play in the way our tax system operates.
There are powers at work that do not want fairness.
So the chances of the nation as a whole dropping stamp duty altogether is very small…
But we can all live and dream.
In the meantime, keep your eyes on South Australia, because it might just become the next big growth spot for commercial property.