Property tax cuts for 400,000 in NSW 17:55 AEST Tue May 24 2005 AAP Up to 400,000 NSW homeowners will be hundreds of dollars better off under cuts to land tax announced in the NSW state budget.
The Labor government responded to community anger over investment property tax changes it brought in last year by reintroducing a land tax-free threshold.
However many house owners may in turn be slugged by higher premiums following a lift in stamp duty on insurance policies.
Treasurer Andrew Refshauge's maiden budget also contains $3.5 billion in borrowing to boost spending on infrastructure, including on transport, education and health.
Two billion dollars will be spent fixing up Sydney's troubled rail system, which has also dented the Carr government's popularity.
Dr Refshauge said a new land tax-free threshold of $330,000 will be introduced from next year, with a new marginal land tax rate of 1.7 per cent of the value of land worth more than that.
About 350,000 people with investment properties worth up to $330,000 will save $1,320 in land tax and 50,000 with properties worth up to $350,000 will save up to $960.
But 100,000 people will pay more land tax to make up for the new threshold.
The 2.25 per cent vendor duty on the sale of investment properties will remain in place.
Dr Refshauge said the government had listened to community concerns about land tax.
"I think they will say the government's done the right thing," he told reporters.
The budget contains a $303 million operating surplus, which is expected to increase to $965 million by 2008-09.
On a net lending basis, which was used by the NSW government in previous years, there is a $979 million deficit.
Stamp duty on household, travel, mortgage and some commercial property insurance will increase from five per cent to nine per cent in September.
The exemption from mortgage duty for re-financing will be capped for loans above $1 million from August this year.
Dr Refshauge called on the insurance industry to absorb the increase instead of passing it onto consumers, saying it had benefited from changes to personal injury laws and the government had halved stamp duty during the insurance crisis following the HIH collapse.
But the Insurance Council of Australia said it was not legally possible for insurance companies to absorb the cost of stamp duty increase.
The government also will invest $34.7 billion on infrastructure over the next four years, an increase of $4.7 billion since 2004-05.
Government trading enterprises will borrow $2.5 billion to finance the new spending while the government itself will borrow $1 billion.
A total of $3 billion will be spent on public transport including $2 billion to fix Sydney's troubled rail system.
Fourteen train stations will be upgraded to improve disabled access at a cost of $23 million, and the government will embark on a rolling program to obtain 600 new carriages.
Road funding will rise by $93 million to $2.9 billion this year, with the Great Western Highway to be widened to four lanes between Katoomba and Woodford.
Dr Refshauge said the government would spend $24 million a day on infrastructure for the next four years.
Two new primary schools will be built in western Sydney, 11 TAFE institutes will be upgraded and $110 million will be spent over four years to support Aboriginal students and students with special needs.
As part of a $901 million hospital funding increase, regional hospitals will be upgraded, 800 new hospital beds will be funded and more money will be spent on elective surgery and mental health.
Opposition leader John Brogden said the government should have used the budget to abolish vendor duty.
"The world's dumbest tax has killed the property market in NSW and driven investment to Queensland, Victoria and even Bob Carr's preferred investment location, New Zealand," Mr Brogden told reporters.
Property industry groups said the government's failure to scrap vendor duty would cost jobs in the construction industry
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