Community consensus emerging on the need to make end of stamp duty the top priority of tax reform
The release of a briefing by the Australian Council on Social Service (ACOSS) on the economic costs of stamp duty is another sign that this harmful tax needs to be abolished. The ACOSS paper follows a similar paper released by NSW Business Chamber.
“Across the business and community spectrum we are seeing strong calls for stamp duty to be the first port of call for tax reform. We do not necessarily agree with some parts of the ACOSS paper but its overarching view that stamp duty is an inefficient tax that hurts Australians is right”, said Ken Morrison, Chief Executive of the Property Council of Australia.
“Respected economic modelling has shown that scrapping stamp duty and replacing it with an efficient tax would provide a $3.3 billion boost to GDP. It would boost consumption by $9.7 billion and create 5,000 additional jobs.
“It would also remove a major inefficiency in housing markets, increase the turnover of housing from an average of 13 years to 8 years, and save tens of thousands of dollars for purchasers.”
Mr Morrison said there is no doubt that the abolition of stamp duty needed to be a top tax reform priority, but expecting this to be done solely through a new land tax on the family home was not realistic.
“There is no doubt that scrapping stamp duty would provide a major productivity boost to our economy, but we need a dose of political realism about how this can be achieved.”
Mr Morrison said new research by Deloitte Access Economics commissioned by the Property Council suggested that a straight stamp duty for land tax swap would not be politically feasible.
“While the purists like the idea of swapping one property tax with another, Deloitte found it would cost the typical household $2,360 a year, or about $45 a week, and that is without carve outs for low income earners.
“This is an average figure and many home owners in our cities would pay considerably more. A typical suburb in Sydney or Melbourne with ‘million dollar values’ would see householders pay $100 a week.
“This is not likely to be politically palatable. Land tax is not a magic pudding and there will be real political limits to applying it to the family home.
“However, we should not forget that the typical householder in Sydney now pays $35,000 in stamp duty and $32,000 in Melbourne and these costs are put on to mortgage repayments.
“ACOSS are right in arguing that the removal of stamp duty would need to be phased in and it could not be funded by a land tax alone.
“Given the substantial economic benefits of abolishing this tax, it makes sense for state and Federal governments to collaborate on how this could be done. Stamp duty might be a state tax, but it’s weighing down the national economy.”
A full copy of the Deloitte Access Economics Report is available below.