Stamp duty: could state governments live without it?
Politicians on all sides promise many things during election campaigns, but finding the money to deliver everything can be tough. Getting rid of one of their mainstays of revenue may just about be unthinkable – or is it?
Queensland’s current election campaign has largely left property off the radar despite construction being one of the LNP’s ‘4 pillars’ for the economy. But our Real Estate Institute’s renewed its call for the abolition of stamp duty in a pitch to the state’s political leaders for further reforms to promote growth in the property sector.
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella says real estate contributes more than $8 billion towards Queensland’s gross state product and supports almost 50,000 jobs throughout the state. “Queensland’s residential real estate sector is in recovery mode and it’s important to build on this momentum,” she says.
Antonia says stamp duty is a regressive tax which imposes additional costs on property transactions, thereby discouraging turnover of housing and distorting choices between renting and buying.
“It also distorts choices between moving house and renovating and can deter labour mobility for those changing jobs, resulting in reduced investment in the property market.”
So how would the government replace these ‘rivers of gold’? The REIQ says stamp duty on property transactions should be abolished and replaced by a more efficient source of revenue. Nationally the real estate institutes are calling for an increase in GST.
With the Federal Government’s white paper on taxation reform due out shortly, this is the time to have this conversation.
Here’s some great summary stats from RP Data’s Cameron Cusher: “Data released last year by the Australian Bureau of Statistics (ABS) showed that across the state and territory governments there was almost $36 billion in taxation revenue from property (note this is both residential and other property types) over the 2012-13 financial year. “
“Stamp duty was the second largest source of tax revenue at $12.841 billion with only municipal rates at $14.192 billion being higher. Over the year, as home values and sales rose, stamp duty revenue increased by 16.9%. Home values moved even higher during the 2013/14 financial year and sales rose further so it is reasonable to expect a further significant increase in stamp duty revenue. “
Cameron suggests a land tax paid by all property owners might be the replacement for stamp duty: “…the ABS estimates that as at June 2013 there were 9,226,900 residential dwellings. Based on this dwelling count, land tax of $1,391.69 annually per residential dwelling would cover the cost of this foregone revenue.”
Yes as real estate agents we’d love to see greater turnover of property – that would help our business. And a larger GST or a land tax would burden a broader population rather than just those moving home and investing. But how many more jobs might be created, and what other economic benefits might there be if stamp duty was abolished?
Please share your comments!
Disclosure: Bees Nees’ principal Rob Honeycombe is the Chairman of the Real Estate Institute of Queensland.