A few weeks ago, under the weight of negative stakeholder sentiment, the Tasmania Liberal government decided to withdraw their plans to introduce a new land tax on foreign-owned primary production land which had been set for introduction on July 1, 2020.
If implemented, foreign owners would have been required to pay approximately 1 per cent of the land value per annum as an additional tax.
A MP alerted investors and the farming community about this proposed tax, giving stakeholders the opportunity to voice their concerns about a proposed tax which had been quietly introduced within the budget process.
Through consultation with farming groups, investors, and local communities it became apparent that the negative consequences of a primary production land tax were wide-ranging and potentially very damaging.
Key concerns raised by industry stakeholders included the impact on the flow of foreign capital into Tasmania, loss of farming and ancillary jobs resulting from new investment, and a reduction in land values, to name a few.
The intention of the government in introducing the tax was to "even the playing field" between local and foreign investors, however, the tax and regulatory hurdles faced by foreign investors are already significant.
Additional taxes will only see investment funds diverted away from agriculture where they are needed to improve infrastructure and shore up regional jobs and local communities.
As part of the next generation of the Australian agricultural industry, I am concerned that these types of tax changes will reduce the amount of capital in agriculture, therefore, reducing the opportunities for everyone.
It has been a refreshing experience to be involved in a consultation process where government have listened to industry and community representatives, taken the information on board and then made a decision in the best interests of constituents.
Unfortunately, not all states have provided a reasonable consultation period to understand stakeholder opinions.
On June 30 this year, Queensland introduced a similar "foreign land tax".
The tax was enshrined into legislation only weeks after the announcement leaving no time to understand the concerns of farming communities and possible unintended consequences of a new and unexpected annual tax.
This has led to a great deal of confusion and uncertainty for both taxpayers and potential investors.
There is still no clear understanding as to what types of land use this surcharge will apply to and whether exemptions are available for primary producers or for properties which are owned by listed entities with partial foreign ownership.
Only time will tell what the impact of this new tax will be on foreign investment in the Queensland ag sector.
States which genuinely consult and listen to the concerns of all impacted parties regarding taxes on foreign ownership of land and refrain from revenue raising at the expense of farming communities, will be rewarded with regional investment by passive long-term investors.
Investment in our regional communities is desperately needed to reach productivity goals.
It's time our state governments help harness the enormous benefits of foreign investment in regional communities by providing certainty in their regulatory and taxation landscape.
More regional investment gives our farming communities the best chance to survive and thrive in these challenging times.
