End stamp duty bonanza to unlock economic growth
New modelling from Deloitte Access Economics finds abolishing stamp duty would add $3.3 billion to GDP and boost consumption by $9.7 billion.
The economic impact of stamp duty, commissioned by the Property Council of Australia, reveals the extent to which stamp duty holds back economic growth and conservatively models the substantial benefits which would flow from three reform options.
It shows that abolishing stamp duty and replacing it with the same amount of GST revenue would accelerate the average turnover of housing from 13 to eight years.
It is estimated that stamp duties stop some 340,000 property transactions each year.
But switching to a more efficient source of revenue would unlock growth across the economy.
“The report shows that the increase in GDP from abolishing stamp duty is equivalent to doubling the size of Australia’s entire dairy industry,” says Property Council chief executive Ken Morrison.
“The $3.3 billion boost to GDP is equal to two thirds of the GDP of car manufacturing, and one quarter of the impact of international tourism.
“The $9.7 billion uplift in real consumption from abolishing stamp duty is so significant that even replacing it with GST revenue would see households more than compensated.
“Deloitte’s modelling calculates that households would on average be better off by an extra $20 per week – which is more than half of the average weekly household expenditure on fuel and power.”
The report also shows that much of this economic benefit comes from abolishing non-residential stamp duty, which makes up 23% of total stamp duty revenues.
It’s a finding the South Australian government has already taken on board, announcing this week it was accelerating in part the abolition of commercial conveyance stamp duties.
South Australian executive director Daniel Gannon says bringing forward the reduction in stamp duty for commercial transactions gives South Australia an instant and powerful, competitive advantage over other jurisdictions.
“Accelerating the abolition of stamp duty on non-residential property transfers sends a powerful message to the business community here in South Australia, interstate and overseas,” Gannon says.
“The removal of this deadweight business tax is a green light for investment and a positive platform for investment hunting, and will also accelerate transaction activity across the state.”
The Property Council has called for stamp duty abolition to be on the table when state and territory leaders and their treasurers meet with the federal government this week.
Releasing its own analysis of budget records, the Property Council pointed to the record stamp duty revenues state and territory governments are reaping.
Nationwide, total revenue from stamp duty on property has climbed from $6.4 billion for the 2000-01 financial year, to $16 billion in 2013-14 and is set to top $20 billion for the first time this financial year.
“State and territory governments are reaping record gains from the growing stamp duty impost at the expense of homebuyers, housing affordability and the economy,” says Morrison.
“Stamp duty has spiralled out of control, stymieing the creation of the new jobs and growth our nation needs.
“Putting an end to this damaging tax would grow the economy and improve the wellbeing of all Australians.
“Getting rid of taxes which harm the economy benefits everybody and should be a key objective of tax reform,” Morrison concludes.