Northern Territory chief minister Michael Gunner has failed to rule out his government will introduce a land tax, raising serious concerns for The Real Estate Institute of the Northern Territory.

REINT chief executive, Quentin Kilian, said, “The chief minister was asked to commit to not introducing a land tax, however in his response, at no time did the chief minister unequivocally commit to not bringing in a land tax."

“A land tax would impact on every Territorian, not just those that own property,” he said. 

Deals already falling over on "whiff" of land tax

Kilian told SCHWARTZWILLIAMS he had spoken to people who had already lost deals "on the whiff of a land tax". One commercial deal was ready to go, he said, but the buyer walked away because he didn't want to pay land tax.

Land tax impact will be felt across the state

The REINT has described the various impacts the introduction of a land tax will have on the state.

"Renters will be impacted as landlords will seek to pass on the tax in higher rents.

"Commercial tenants and retailers will be impacted as their landlords will seek to pass through the tax in increased outgoings costs, and that would include all the space currently rented by government offices. 

"Agricultural businesses would be impacted as their large properties would be taxed leading to less profitability in this sector and putting at risk export markets to Asia.

"Elderly people and people on low or fixed incomes will be impacted because if you were to impose a tax of 0.5% on the current Darwin City UCV’s, the average additional tax bill – every year – would be around $1,825.

"Small businesses will be affected as land taxes have been proven to impact on cash flows and thereby borrowing capacities for businesses.  This will mean less investment into their businesses."

“And bear in mind,” said Kilian, “the discussion paper on this new taxation regime indicated that if a land tax were to be introduced it would be in addition to, not in place of, stamp duty. So a person purchasing property in the Territory would be hit twice for taxation.”

In its response to the government's Northern Territory Revenue Discussion Paper, the REINT said the imposition now of a land tax would be "ill-timed" given the current state of the property in the Northern Territory, and in particular in Darwin.

NZ land tax saw land values fall 16.7 per cent

“There is empirical evidence from markets such as New Zealand that have shown a 1 percent land tax led to a fall in land values of 16.7 per cent,” said Kilian.

The REINT said bringing in a land tax would drive investors away, and accelerate the decline in the state's population.

"We are therefore calling on the Government to absolutely rule out the introduction of a land tax for the Northern Territory in the next budget," stated Kilian.

Read more about Northern Territory real estate:

"We must remain positive": Darwin property remains in a slump

Bottom of the property market cycle is not a time for panic

Get to know Elaine Mills, winner of the Innovation Award at the REINT 2017 Awards for Excellence