The property industry is demanding tax reform to rectify key issues crippling growth and unaffordability across the sector, according to the latest Real Estate & Construction Industry Insights Report from Grant Thornton.
Ninety percent of industry participants surveyed were supportive of comprehensive tax reform and 77% agreed to a ‘no exceptions’ basis of reform, giving the Government a mandate to do what is needed to improve the current model.
Sian Sinclair, global head of real estate and construction for Grant Thornton, said that the majority of respondents wanted to see stamp duty abolished and were in favour of increasing or broadening GST as a replacement revenue stream.
“The preference to pay more GST over stamp duty is quite remarkable, given GST represents a real cost to residential property developers who, unlike many suppliers are price-takers when they sell their product, working backwards on the market price rather than applying an additional 10%,” she said.
“While abolition of stamp duty is often on the wish list and historically has been linked to GST, the upcoming review of the federation model means now is the time for the industry to speak up.”
While most voted for the removal of stamp duty, others indicated they would like to see an overall decrease in the rate of property taxes.
“Stamp duty has been identified as crippling to the industry, with 80% attributing the inefficient tax to housing affordability issues. Sadly almost half (46%) of those we spoke to admitted to not pursuing a project or purchase opportunity because of the stamp duty costs involved, demonstrating the negative impact on transaction activity.”
Sinclair says it is imperative for the industry to articulate and advocate for the changes desired for the sector as the Government prepares its tax reform review.
“Tax reform is on the agenda and the statistics in our report show there is a clear mandate for real change. Now is the time to speak up and be heard to ensure inefficient taxes do not continue to impact affordability and stifle the property sector,” she said.