New analysis shows that average stamp duty costs have increased by between 527% and 795% across the country in the last twenty years, throwing up a major barrier to home ownership in Australia.
According to the analysis by the Property Council of Australia, the true cost of stamp duty over the life of an average mortgage is now $61,542 in Sydney, $56,616 in Melbourne, $14,733 in Brisbane, $21,564 in Hobart, $33,654 in Perth, $35,427 in Canberra, $30,393 in Adelaide and $49,701 in Darwin.
Property Council of Australia chief executive Ken Morrison says stamp duty is out of control and is now one of the biggest impediments to entering the housing market.
“Stamp duty has become a run-away cash grab that’s hurting Australia’s economy and locking out potential homebuyers,” he said.
“These astounding increases in the costs of stamp duty are nothing short of scandalous.
“Stamp duty is effectively the last dollar you pay off your mortgage and homebuyers can’t afford to be hit with tens of thousands of extra dollars in the cost of an average house. But that’s exactly what is happening now under this out-of-control system, despite the low interest environment.”
According to Morrison, both the Henry Tax Review and the recent tax discussion paper identified stamp duty as the tax with highest costs to economic growth and living standards.
“Treasury’s own modelling shows that Australia’s economic welfare is reduced by 73 cents for every dollar of stamp duty revenue. That’s 50% worse than company tax, and three and a half times worse than GST or income tax.
“Taxes are supposed to lean lightly on the economy, not act as a barrier to economic activity, job creation and prosperity, but that is exactly what stamp duty does.”
The Property Council has commissioned detailed research on improved taxation models as part of its submission to the Federal Government’s tax white paper reform process. This research recommends replacing stamp duty with more efficient and less harmful revenue sources such as GST.