ACT gives up on stamp duty abolition

ACT gives up on stamp duty abolitionThe ACT Government’s decision to abandon its plan to abolish stamp duty is a retrograde step that shows the limits of the ACT approach to reform, says the Property Council.ACT Chief Minister Andrew Barr has confirmed that stamp duty will “remain part of our tax system for a considerable time to come”, despite the ACT Government’s commitment to “abolish conveyance duty over a 20-year period” in the 2012 Budget.Since then, rates for residential property have risen by around 10 per cent and commercial rates by around 40 per cent, while the highest rate of stamp duty has also increased.Modelling by the Property Council has found that stamp duty costs in the ACT have risen by 537 per cent over the past 20 years. The Property Council’s ACT Executive Director, Catherine Carter, says the industry has supported the ACT Government’s tax reform program to date, because stamp duty is “an unreliable and inefficient roller-coaster of a tax”.”While we’ve supported the ACT Government’s commitment to taxation reform, the Chief Minister is now reneging on a promise made to the Canberra community to make property taxes fairer, more equitable and more efficient,” Ms Carter says.According to Property Council chief executive Ken Morrison the ACT’s move is a “good idea gone wrong”.”The Property Council appreciates that abolishing stamp duty means that alternative revenue sources must be found, but what this example shows is you can’t rely purely on land tax to do that job,” Morrison says.Treasury modelling has found that Australia’s economic welfare is reduced by 73 cents for every dollar of stamp duty revenue raised. Morrison says this is per cent worse than company tax, and three and a half times worse than GST or income tax.”The clearest possible lesson from the ACT experience is that you can’t just swap out one bad tax for another,” Morrison adds.”National tax reform must target the phase out of our most harmful taxes and replacing them with more efficient sources of revenue. Stamp duty abolition must stay on the agenda,” Morrison concludes.