Stamp Duty Reform and the First Home Builders Grant as Economic Drivers
In almost every review of taxation conducted throughout Australia, stamp duty has been recognised as the most inefficient of all taxes. It increases the cost of business, decreases competitiveness, and makes new residential developments less affordable than existing housing.
In the residential sector, developments are double-taxed, being hit with both GST and stamp duty.
In the commercial sector, the removal of stamp duty in line with the growth in GST revenue should be strongly considered before becoming even further entrenched in the SateGovernment’s budgeting.
First Home Builders Grant
The First Home Builders Grant (FHBG) is a State Government initiative to stimulate activity in the building industry and increase housing affordability to first home owners. The level of the grant at its height in 2014 was $30,000 but will be reduced to $10,000 from 1 June 2017.
Most importantly, it made a block of land and building a house affordable for younger people and in our experience many couples and individuals entered the housing market who could previously not afford to do so.
To increase first home ownership the State Government needs to make important changes to the FHBG:
- raise the level back to $30,000;
- change the criteria to ‘never having built a home in Tasmania before’;
- deliver a suite of land releases including re-zoning;
- incentivise inner-city living; and
- implement an Urban Redevelopment Strategy.
The FHOG then also becomes a population growth tool. Any person from overseas or another state would be able to access the FHOG, providing they buy land and build, and then live in the homefor the required period.
Raising the grant to $30,000 will have a competitive advantage over other states that have their first home owner grants between $15,000 to $20,000 levels: -
- allowing young Tasmanians to enter the housing market;
- sustaining the number of jobs and create more employment in the industry (approximately 12 FTE’s per million spent);
- encouraging young people to come/return to Tasmania to live (thus assisting to address the age structure problem in the state); and
- creating significant downstream spending locally.
The building of new homes should be considered in a manner where a house worth $300,000 delivers significantly to the local economy. To put this into context an extra 2500 people to Tasmania is an extra 1000 new homes a year which will deliver a boost of at least $300 million to the economy. Just imagine the economic stimulus. This really is very achievable with just a little bit of investment, focus and effort. It is a key driver for the state that should be seriously considered.