The Real Estate Institute of Australia (REIA) has once again urged the government to abolish property taxation.
Responding to the National Housing Finance and Investment Corporation’s (NHFIC) Stamp Duty Reform: Benefits and Challenges report, the REIA noted the need for a “serious stamp duty reform” to take away “one of the largest barriers to housing affordability and consistently performing markets”.
The NHFIC report found that a household that bought a Sydney median-priced house four times over the past 20 years would have paid more than 10 times the stamp duty than a household that made only one purchase.
Indeed, Australians across most states and territories — except the ACT — are paying more stamp duty today than 20 years ago, according to REIA president Adrian Kelly.
“Politicians cannot on one hand gripe about housing affordability, and on the other say we need this income from home buyers and owners to fund public sector operations,” the president said.
“REIA renews our call on the Council of Federal Financial Relations to take on board this issue seriously and nationally rather than just shift this responsibility off to states and territories.
“Calls from the NSW government as reported by The Australian today — with the federal government to set up a productivity fund to incentivise stamp duty reform — is one sensible approach to make our federation competitive and get this important reform going in earnest.”
According to NHFIC, the removal of stamp duty could increase mobility, and thus provide substantial benefits to the overall economy, including more efficient use of housing stock and improved labour productivity.
The report presented the potential of transitioning from stamp duty to land tax as a solution to current property taxation concerns, but Mr Kelly warned that this is unlikely to be a be-all and end-all remedy for affordability.
According to him, while NHFIC concludes that consumers are better off paying land tax than a stamp duty, the transition needs to be done correctly and examined for possible long-term consequences to be truly effective.
He highlighted the ACT’s experience “that land tax has scared off investors from the market and significantly reduced the amount of private rentals available”.
“So, if you want rents to stabilise, a broad-based tax or even revising the GST to be shared equally by all sectors of the economy would be a better replacement than unfairly taxing homes and households,” according to Mr Kelly.
“Alternatively, an opt-in approach to the payment of stamp duty, where the user elects what to pay and when, is another pragmatic approach.”
Ultimately, state governments should reconsider their focus on taxing Australian homes and households for their own funding, the president concluded.