According to a report recently released by Moody’s, the property recession led by the nation’s two biggest housing markets is weakening Queensland’s revenue gains from reforms to GST funding.
Moody’s Investor Services states government debt levels remain high and could surpass revenue growth on capital spending programs in the sunshine state.
In addition, even though the current GST reform has provided Queensland with an additional $518 million over the next eight years, the rating agency stated that it may not be enough to offset the fall in stamp duty.
Moody’s report singles out Queensland as being vulnerable to increases in health and education costs due to its recent rapid population growth.
Therefore, Moody’s anticipates an increase in capital spending in the state, which would weaken cash reserves and prompt the Queensland government to issue additional debt.
Moody’s senior credit officer, John Manning, stated, “Debt levels stay raised, and we expect debt will continue to increase more rapidly than profits as the majority of states embark on record capital spending programs.”
In its most current budget update, the state government also marked down stamp duties by $240 million.
NSW and Victoria are anticipated to be hit the hardest
In the report, Mr Manning said, “Despite already projecting lower property-related revenue in their fiscal year 2019 budgets, the larger states of NSW and Victoria now forecast further declines in transfer duty and land tax revenue as a result of weakening residential property market prices and falling sales volumes.
“Concurrently, Queensland projects a marginal decrease in average revenue growth over the forecast period, reflecting lower income from GST and dividends, more than offsetting increased royalties in FY2019, largely on higher coal prices.”
Earlier this month, data from CoreLogic revealed national home values dropped 4.8% in 2018, making it the weakest housing market since 2008. However, Brisbane managed to pull off a 1.2% increase for the year.
If you need reliable tax advice for your property investments, contact a Chan & Naylor accountant here, and we’ll be more than happy to help.
Aside from tax strategies that will help you to legally reduce your tax, have a look at our other accounting and advisory services that we do to help you achieve greater success.
Chan & Naylor Group has national offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can assist you with any business, personal, and property tax enquiries that you may have. Contact us today.