'Action, not rhetoric' needed to abolish stamp duty

by AB30 Aug 2013

Property taxes such as stamp duty are inefficient and should be abolished, according to the Real Estate Institute of Australia (REIA).

“The next government needs to make the tough decisions. Action, not rhetoric, is what’s needed now,” says REIA president, Peter Bushby. “Stamp duties on property transfers are not only inefficient but they are costly to manage, reduce national competitiveness and productivity and are unequally and unfairly applied.”

Bushby argues that taxes set by all three tiers of government have an impact on housing affordability and that stamp duties, land taxes, risk premiums and finance charges push up the cost of new housing and restrict supply.

“The average tax burden on the new housing sector is estimated at around 31% of the value of output. It’s estimated that the removal of some inefficient taxes could reduce the cost of housing by around 10%.”

The REIA is calling for the establishment of an independent, on-going Tax Reform Review Group, comprising industry and welfare groups, to have an advisory role to government and the Parliament on a schedule for tax reform.”

“We welcome comments by the opposition that all taxes, including GST, will be reviewed by the Productivity Commission and that unnecessary taxes will be abolished. This will encourage business to grow and create more jobs,” says Bushby.

COMMENTS

  • by Gavin R. Putland 30/08/2013 10:33:54 AM

    If you're a home owner, you don't have to pay stamp duty just because you change your address. If you let your old address to tenants and rent your new address, there's no change of ownership, hence no stamp duty, no conveyancing fees and no agent's commission.

    And if the interest and other outgoings on your old address exceed the rent, you can start claiming negative gearing. (I'm not condoning the related tax rules -- just stating a fact.)

    Will you start paying land tax and rental management fees? Probably, but that's all tax-deductible too -- unlike the costs of selling and buying your principal residence. Could you become liable for capital gains tax? Only if you make a capital gain! Stamp duty, conveyancing fees and agents' commissions offer no such safeguard.

    Of course, if enough people use this trick, governments will change the rules. If the existing duty is replaced by land tax, revenue will not depend on turnover. If the existing duty is replaced by a vendor duty on the capital gain, owners who sell and buy less often will pay their duty in less frequent but larger instalments. In the mean time, those who avoid unnecessary transfers of title can save a fortune.

  • by Country Broker 30/08/2013 11:31:30 AM

    When the GST was introduced , stamp duty was to be cut , it has never happened as it is a state government tax , if we really want the economy to fire up forget the mineral boom, make to a lot easier and less expensive to build a family home particularly in Regional Australia. The Federal Government needs to ;encourage" the states to make this happen , no stamp duty on land sales if you are going to owner occupy and the GST from the construction of that house goes back to the state government, where the house is being built . Will this happen no its too simple.

  • by SIDBROKER 30/08/2013 12:36:29 PM

    And how long have I been saying this in this forum. Glad to see someone is listening. Now what about some action to roll back NCCP to a practical level.