A Tasmanian economist has argued a decrease in rental prices due to a land tax slash is a "myth propagated by the property industry".
Tax relief is hoped to ease the cost of living for owners of rental properties, shacks, vacant land and commercial property.
But there are concerns Tasmanians are still paying double in comparison to mainland counterparts for the same property value.
The Tasmanian government has revealed plans to double the tax-free threshold for land tax to $100,000, less than a year after initially doubling it to $50,000
The upper threshold for land tax will also be raised to $500,000.
The state government says the latest changes will mean 70,000 Tasmanians save an average of $800 each year.
While Premier Peter Gutwein said he would not speculate on future reductions to land tax, he believed "we've broadly landed in the right level for the Tasmanian context".
"There will be around 12,000 Tasmanians now in total, as a result of the changes that we made last year, and the changes that we're making now, that will no longer pay land tax," he said.
"Many of them are not what you would consider to be property moguls.
"This is a sensible way of ensuring that we can put downward pressure on rents, and ensure that we maintain an attractive proposition for investment."
What is land tax?
Land tax is an annual tax payable by the owner of land that is not the owner's primary home and is calculated on the assessed land value shown on land tax assessment notices.
The Office of the Valuer-General determines assessed land value annually on July 1.
Properties that are taxable include vacant land, commercial properties, rental properties and shacks.
It is not payable on a property which is the owner's principal place of residence or if the land is classified as primary production land.
Are the changes enough?
The Tasmanian Residential Rental Property Owners Association's Louise Elliot said the state government's planned changes to land tax do not go far enough.
"It's still really quite underwhelming given our threshold is $100,000 where elsewhere around Australia you won't start paying land tax until at least $250,000 and in some cases up to $500,000 or higher," she said.
Independent Tasmanian economist Saul Eslake said Tasmania's top land tax rate is "by no means the highest in the country".
"Tasmanians with comparatively modest land holdings, which are not exempt because they're not the principle place of residence, tend to be subject to higher amounts of tax than people holding similarly valued land in other parts of the country," he said.
"And that reflects the fact that historically land values in Tasmania have been much lower than in other parts of the country.
"But now that the average land value in Hobart is higher than in Brisbane, Adelaide or Perth, for example, and not that far short of Melbourne, that comparison no longer applies."
Will it have an impact on renters?
Ms Elliot, who represents landlords, said a cut to land tax could be beneficial to rental tenants.
"It can help because human nature goes to show that when you open a land tax bill that is dramatically higher, like double or triple what you have been paying in the past, that's a shock to the system," she said.
"That makes owners much more inclined to say yes to increasing the rent on the property.
"It will prevent a lot of people's rent from going up, which it would have done in the next few months.
"But excessively high land tax that's completely out of the ballpark of the national picture, it's another barrier to new homes in Tasmania, it's another deterrent to rental ownership, and it's more pressure on rental prices."
However, Mr Eslake does not expect reductions in land tax to be passed on in the form of lower rents.
"Rents are determined by the interaction of demand and supply in the land market, in the rental housing market.
"I'd be very surprised if many landlords, having received a lower land tax bill, decide to reduce the rents they charge their tenants."
