Hockey’s call for proper debate on state taxes welcome
Federal Treasurer Joe Hockey’s call for a proper debate on state taxes and the state governments’ over-reliance on inefficient state taxes including stamp duty is welcome and completely in line with community attitudes, according to the Property Council of Australia.
The Treasurer’s speech comes just days after polling revealed widespread public acceptance of future GST changes, Property Council Chief Executive Ken Morrison said.
“Joe Hockey has said what everyone knows – stamp duty is a harmful, distortive tax which needs to be abolished and this will require broader tax reform to be achieved,” Mr Morrison said.
“Abolishing stamp duty and replacing it with a more efficient revenue base would address housing affordability, boost the economy, be supported by the community, and bolster fragile state budgets.
“Obviously the removal of stamp duty needs to occur in conjunction with a broader series of tax changes so that states and territories have the revenue they need to deliver services, and it is essential that GST reform is on the table.”
A report from Newgate Research Community attitudes towards tax reform*, commissioned by the Property Council, found that nine out of ten Australians surveyed supported tax reform which made the system simpler and fairer.
“Far from being political poison, people see the GST as our fairest tax,” Mr Morrison said.
“Our research shows that a reformed GST would pass the fairness test set by our political leaders.
“Some 65 per cent of respondents believed the GST to be fair or very fair, and only 35 per cent as unfair, with most citing its benefit as a tax that cannot be dodged.
“While there was some variation, this fairness rating was the majority view regardless of the respondent’s gender, age, state, voting intention or property tenure.
“The research also shows that people think it is inevitable that the GST will go up. When asked what they believed would happen over the next decade, almost three quarters (72 per cent) said the GST will increase.
“Strikingly, only two per cent believed it would definitely not go up and just six per cent that it would probably not go up. For the public, this is almost a done deal.
“Getting rid of stamp duty needs to be a top priority of every government in the country.
“It has the highest costs to economic growth and living standards.
“Treasury’s own modeling shows that Australia’s economic welfare is reduced by 73 cents for every dollar of stamp duty raised, which is per cent worse than company tax and three and a half times worse than income tax or the GST.”
The Treasurer’s today coincides with a release of the Grattan Institute’s Property Taxes working paper which moots the introduction of a new property tax on owner occupied housing.
“We welcome the Grattan’s Institute acknowledgement that stamp duty needs to be abolished, but the idea of introducing yet another new property tax without retiring existing inefficient taxes is unfair and will unacceptable to the community.
“The Grattan report conveniently leaves out stamp duty in its attempts to argue that property is under taxed in Australia.
“The industry currently pays $77 billion of taxes to all three levels of government. Treasury estimates that property specific taxes make up 9 per cent of Australia’s total tax take compared to an OECD average of just 5 per cent. We’re surprised Grattan would get this so wrong.
“Furthermore the Grattan Institute report admits that they would need an extra new property tax at double the rate they proposed to fund the replacement of stamp duty.
“The Property Council is happy to explore the option of a broad based low rate land tax, but the reality is that it won’t raise enough money to abolish stamp duty, it will be politically unpopular and it doesn’t do anything to fix the high land taxes on commercial and investment property.
“There is absolutely no justification for a new property tax that does not offset other punitive taxes.
“Changes to the GST is a practical solution to enable stamp duties to be retired to boost the economy in a way that is fair.”
Media contact: Matt Cross| M 0402 155 372 | [email protected]
*Newgate Research report is based on the answers of 1,957 respondents surveyed nationwide in May and June 2015.