It is a truth universally acknowledged that the mere mention of new taxes is enough to get most politicians shouting and fuming.
That was the case in Tasmania's state parliament on Thursday, when the Labor opposition raised comments by Premier Jeremy Rockliff in a newspaper article where he refused to rule out extending land tax to family homes.
In parliament, Mr Rockliff again refused to rule the move in or out, instead saying he would have a sensible conversation with the Tasmanian community and accusing the opposition of being too weak to govern.
Later that same afternoon, the Tasmanian government released a statement clarifying that it had no plans to tax land with the family home on it.
But with most economists, the productivity commission and the Henry Tax Review recommending a broad-based land tax, why not?
What is land tax?
In every state, some landowners must pay a yearly tax, based on the value of their land, to the state government.
The tax is calculated based on the value of the land — not the value of the dwelling on it — and is assessed by the state's valuer general.
In Tasmania, you only have to pay tax on land you own which is not your "principal residence land" — so you don't pay tax on the land the home you usually live in is built on.
Tasmanians also don't have to pay tax on land which is used mostly for a primary production — or farming — business.
Tasmanians do have to pay the tax on general land — this includes land which has a shack or holiday home on it, a rental investment property, vacant land and land with commercial businesses on it.
Because most land in Tasmania is exempt from being taxed, the state government instead relies on property transfer duty (usually called "stamp duty") to get more revenue.
When Tasmanians purchase a property, they have to pay a one-off tax based on the value of the transaction, or the sale price of the home.
This usually means homebuyers have to pay a sizeable stamp duty bill on top of the sale price of the home.
Why replace stamp duty with a broad-based land tax?
Most economists argue that instead of taxing only the sale price of land and dwelling, state governments should scrap stamp duty and extend, or "broaden", land tax so all land owners pay a comparatively small annual tax on the value of the land.
This is what's meant by a "broad-based land tax" — it wouldn't exclude the family home, or principal residence land.
Independent economist Saul Eslake has long called for stamp duty to be replaced with a broad-based land tax.
He says stamp duty is one of the worst and least efficient taxes from an economic perspective because it's hard to predict how much revenue it'll generate for governments and it distorts people's behaviour by discouraging them from buying and selling houses when it would suit them to.
He uses the example of an older couple who no longer need the big house they bought when their children lived at home but might avoid downsizing because they'll have to pay stamp duty on the purchase of a new smaller home.
Mr Eslake said stamp duty was also not a fair tax.
"Our property tax system requires those who, for whatever reason, move home a lot more often in the course of their lives to pay to make a bigger contribution to the cost of providing schools, hospitals, roads, social housing and other state government services than people who buy a home once in their life and then live in it for the next 25 or more years," he said.
"So there's an equity argument as well as an economic efficiency argument for replacing stamp duty on land transfers with a more broadly based land tax that would also apply to principal places of residence."
What are the other arguments for it?
Mr Eslake said broad-based land taxes are highly efficient and "one of the least worst" taxes ever invented.
"It's highly predictable, it's easy to collect, it's difficult to avoid, and it doesn't distort decisions in how land is used, in the way that stamp duties will," he said.
Mr Eslake said a broad-based land tax would improve productivity by encouraging businesses to use land more effectively, and discourage speculative land holdings, or "land banking".
"Most economists would also argue that it would help improve housing affordability by no longer requiring people buying homes to pay an additional tax when they do so, but rather spreading out the cost of whatever contribution they're expected to make to government revenue over a much longer period of time so that it can be less painful," he said.
What are the arguments against it?
If broad-based land taxes are so great, why haven't states around Australia already embraced them and got rid of stamp duty on home sales?
Because there's likely to be a big backlash from homeowners, who won't be happy about paying a new tax.
Mr Eslake said it would take a great deal of courage for a state government to make the change.
"Whereas stamp duties only apply to a relatively small number of people each year, a broadly based land tax would break the political taboo on taxing the so-called family home, and would require a very large number of people to pay what may not be a big amount of tax, but nonetheless tax they hadn't paid before every year," he said.
"That is, of course, very politically challenging for any government to contemplate."
Governments would also have to find a way to avoid slugging people who had recently paid stamp duty with the new land tax.
"A government would have to offer some kind of concession to people who'd recently bought property, for example by giving them a credit for any land tax they might have to pay for stamp duty they'd paid in say the last three to five years," Mr Eslake said.
A state government switching from stamp duty to a broad-based land tax would also lose a lot of tax revenue during the early years of the transition.
How much would land tax on a family home be?
It's hard to determine how much tax the average Tasmanian homeowner would pay if the land tax base was broadened to cover principal residence land, as there's no data on median land value and the state government might introduce new or changed rates.
But we can take a guess by using the current Tasmanian land tax rates and the State Revenue Office's land tax calculator.
There's no land tax payable on the first $100,000 of the land's value, and there are different tax rates for land valued up to $499,000 and land valued above that.
So if the land your primary residence is on was most recently valued at $150,000, you'd get a yearly land tax bill of $275.
If it was valued at $300,000, you'd be up for an annual tax bill of $950.
If your land was valued at $600,000 you'd get an annual land tax bill of $3,350.
For comparison, under a one-off stamp duty scheme, if you paid $600,000 to buy a block of land with a house on it and were not eligible for any concessions, you would pay $22,497.50.
How is it being done in other states?
New South Wales is allowing some first home buyers to choose to pay annual land tax instead of stamp duty.
The choice is available to first-time buyers purchasing a home worth up to $1.5 million and was announced in the state's most recent budget.
If buyers decide to opt out of paying stamp duty, they will pay $400 plus 0.3 per cent of the land value per year.
If a buyer decides to pay the annual property tax, that property is not locked in to the scheme when it is sold.
NSW Premier Dominic Perrottet argues that will lower the barrier for first home buyers to get into the property market.
But the scheme falls short of the reform Mr Perrottet had been pushing when he was treasurer.
He wanted 80 per cent of homes across the state to have the option of paying an annual land tax, and buyers would be eligible regardless of whether they were purchasing their first home.
But Mr Perrottet previously conceded such large-scale reform couldn't be achieved without the help of the Commonwealth because of the loss of government revenue, which is estimated to be about $2.5 billion per year.
The ACT started transitioning away from stamp duty to a broad-based land tax about a decade ago.
It's gone about the change in a different way to New South Wales.
Because of the capital territory's small geographic size, all property owners pay annual rates to the ACT government instead of to a local council like in other larger states and territories.
The ACT government raised these property rates each year, sometimes by up to 10 per cent, to gradually replace the revenue from volatile taxes like stamp duty with a broad-based land tax.
Two independent reports have found the tax changes slightly increased economic activity and house prices, encouraged lower income earners to buy a home, potentially reduced rents, and marginally decreased government revenue.
