Stamp duty could be scrapped under recommendations by the Senate Economics References Committee’s Affordable Housing report.
According to Australia’s last major tax review, the Henry Tax Review published in 2010, the average rate of stamp duty across the states rose from 2.45% in 1993 to 3.25% in 2005, due to the non-indexation of the scales in the face of property appreciation.
The highest rate of stamp duty, the Henry Review further noted, was 7% for residential properties valued above $3 million in New South Wales.
The Senate’s Affordable Housing report, released last week, has called for a review of stamp duties, labelling stamp duties as inefficient and damaging.
“The committee believes stamp duties are an inefficient, productivity damaging form of taxation, which ultimately increase barriers to home ownership.
“The committee also notes evidence that stamp duties reduce peoples' choice and flexibility in relation to their housing situation—including to downsize as circumstances change, move closer to work, and so on. This, in turn, damages labour mobility and hurts economic productivity more generally.”
As such, the committee recommends that responses to the current Tax White Paper discuss the phasing out of conveyancing stamp duties by state and territory governments, in favour of broader tax reform.
“Currently, stamp duties constitute a significant source of revenue for the states and territories, and it would be unrealistic and even irresponsible to advocate their abolition without acknowledging that a replacement source of revenue would be required.
“The committee considers the Henry Review recommendations a good foundation for discussion on the need to move from stamp duties to broader, more efficient forms of taxation. As part of this discussion, the committee believes that states and territories should consider broadening the base of existing land taxation.”
The Real Estate Institute of Australia CEO, Amanda Lynch says the association is pleased to see the report’s recommendation that stamp duties be phased out.
“REIA has long argued stamp duties are a highly inefficient tax that limits population mobility as highlighted in the Henry Tax Review,” she said.
“It is very pleasing to see the Government consider the new dynamics facing younger Australians and we now call on the Government to follow up this review with sensible and workable actions.”