Government property tax revenue slumps thanks to the GFC Data released this week from the ABS shows that Government revenue from property related taxes slumped during the 2008-09 financial year however, taxes on property remains the largest revenue source for State and Local Governments They say there are two guarantees in life: death and taxes. State and local governments raked in almost $28 billion in property related taxes during the 2008-09 financial year. Despite the $28 billion windfall for state and local governments from property related tax, it was a fall in property related tax revenue of -10.4% from the previous year. The 2008-09 financial year was also the first time since 2004-05 there was a fall in property related taxation revenue. Property related taxes still account for the largest component of state and local government taxation revenue, at 45.3% of revenue, down from 49.2% in 2007-08. In comparison, employer’s payroll tax is the second largest revenue stream for state and local governments yet it equates to only 27.5% of revenue. Despite the fact that a severe economic downturn was experienced during the 2008-09 financial year, state and local governments were able to grow taxation revenue across all other taxation categories apart from property. During the 2008-09 financial year the volume of property transactions fell by -8.4% compared with 2007-08. Whilst volumes were down -8.4% property related taxation revenue to government fell by -10.4%. It is likely that this result is reflective of the fact that it was more affordable property types which were the first to recover and the fact that the greatest falls in property sales volumes and values were recorded across the most expensive properties. Higher priced properties are subject to a greater level of stamp duty and a higher rate of land tax. There are many different property related taxes however, during the 2008-09 financial year the largest revenue stream for state and local governments was municipal rates. Municipal rates accounted for 39% of revenue followed by stamp duty on transfers (34%). During the previous financial year stamp duty on transfer revenues equated to 46% of total revenue. Total stamp duty revenue fell by -33% during the 2008-09 financial year. The -33% fall in stamp duty on transfers revenue coupled with the -8.4% fall in property transactions again reflects the fact that higher priced properties recorded the greatest falls in values and was the last segment of the market to recover. Typically, stamp duty works on a sliding scale and those properties which are more expensive typically pay a higher rate of stamp duty. With fewer high priced property transactions (and fewer overall property transactions) it is logical that stamp duty revenue would fall. Total stamp duty on transfer revenue had not been as low since the 2004-05 financial year. Whilst stamp duty on transfer revenues recorded an annual fall of -33%, other stamp duties recorded a fall of -68% however, they have typically only been a small portion of overall property related revenue. Whilst these two income streams fell significantly, revenues grew elsewhere. Revenue from government borrowing guarantee levies grew by 53%, land taxes increased 28%, municipal rates increased by 6% and other taxes on immovable property increased by 6%. The results highlight just how important property related taxes are to local and state governments. These taxes make up their single biggest revenue stream. Given this, a healthy property market with plenty of transactions occurring is extremely important for state and local governments. Interestingly, the recent introduction of schemes such as the First Home Owners Grant Boost and the relaxation of foreign investment laws have been of little benefit (financially speaking) to the Federal Government. As a proportion of total taxation revenue to the federal government, property related taxes accounted for less than 0.01% of total revenue.