Stamp duty distortion must end says Treasury

Stamp duty distortion must end says TreasuryAn “inside perspective” on the Tax White Paper finds Australia’s reliance on stamp duty has a high economic cost and puts economic growth at risk.”Stamp duties are one of the most inefficient taxes levied in Australia,” the head of Treasury’s tax analysis division Roger Brake told the audience at the Tax Institute conference last week.”Unlike broad-based taxes on consumption or payrolls, stamp duties are applied to the total transaction value rather than the ‘value added’ component,” he explained.”Stamp duties, when expressed as a percentage of the economic value associated with a transaction, are actually levied at very high rates.”Brake argued that stamp duties on conveyancing have significant economic costs.By applying the handbrake to the exchange and reallocation of residential and business property, “stamp duties discourage the allocation of property to those who value it most.”This distortion adds to the economic cost of stamp duties.”Pointing to solutions such as the ACT’s phased cuts to stamp duty and South Australia’s planned abolition of stamp duty on non-residential real property transfers over three years, Brake added that there are “big opportunities to do more”.Property Council of Australia chief executive Ken Morrison welcomed the Treasury official’s comments.”There is a clear consensus that stamp duty has the biggest distortion on the economy and locks people out of the housing best suited for them,” Morrison says.Earlier this year, the Property Council released figures which revealed the true cost of stamp duty over the life of an average mortgage.Stamp duty costs have risen by as much as 800 per cent over the last two decades, with the average family shelling out $61,542 in Sydney and $56,616 in Melbourne.”Stamp duty is a barrier to economic growth, job creation and prosperity and it is pleasing to see this recognised in responses to the tax discussion paper,” Morrison concludes.