The main obstacle to building new homes is the heavy tax burden that states have placed on the housing sector. This has led to unaffordable housing prices in Australia, leaving many without hope of a stable financial future. The high taxes, including stamp duty, land tax, and infrastructure charges, have hindered private developers from constructing the necessary number of homes. Despite some efforts by developers, the tax system has made it challenging to meet the demand for housing, exacerbated by restrictions in the supply of land, labor, and materials. State governments need to address these tax issues and focus on expanding the supply of land to effectively tackle the housing crisis. The current tax system discourages downsizing and moving for work, while also impacting development and investment. Land tax, although considered efficient by Adam Smith, is only levied on investors at high rates, starting at a certain threshold. This discourages landlords from owning more than one property and penalizes developers by making land holding costs more expensive. State governments tend to tax overseas investors more heavily, which hinders investment opportunities.
Infrastructure charges pose a major challenge for developers, especially in broadscale subdivision projects. Large developers are required to cover all infrastructure costs, such as upgrading highways, water, and electricity, before selling any house blocks. This cost burden is then passed on to the buyers, making it difficult for smaller developers to compete in the market.
To foster competitive development markets, there is a need for state governments to implement a revised tax system that does not penalize developers or new home buyers. This would allow smaller developers to compete against larger ones and stimulate growth in the housing market. It is essential for states to become competitive again and promote investment in development projects. Please rewrite this sentence.
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