Radical new plan for stamp duty could prove saving grace for buyers and sellers
There are radical new plans to change the stamp duty system when you buy a house in Australia.
The plan hopes to give buyers a choice between paying the stamp duty up-front or paying land tax over the subsequent 15 to 20 years.
The change is being proposed to take pressure off households paying tens of thousands of dollars when they buy, while also relieving pressure from state governments during downturns in the housing market.
“Stamp duty is one of the worst taxes you will see, and there’s not an economist you will meet that says stamp duty is a good tax,” said NSW State Treasurer Dominic Perrottet.
If you buy a home for the median Sydney house price of $1 million, it costs $40,000 in stamp duty.
“Stamp duty rates haven’t been adjusted for 32 years. The government is simply ignoring the problem,” said the Real Estate Institute’s Tim McKibbin.
Changing the stamp duty system could also change state government budgets.
Two years ago, the NSW Government earnt $9.7 billion from stamp duty as property boomed. This year they earnt significantly less, at $7.7 billion.
“Stamp duty is around nine percent of our total revenue,” admitted Mr Perrottet.
“Certainly, it’s having an impact.”
Last weekend, just 197 houses sold at auction compared to 411 on the same weekend last year.
The Treasurer has assured taxpayers that the property downturn will not compromise the roll-out of infrastructure in New South Wales.
“We’re not like Western Australia, when the mining boom was coming down that all of a sudden their service provision was jeopardised,” he said.
The Productivity Commission, the Henry Tax Review and the Committee for Economic Development say land taxes on homes are better than stamp duty.
It will also take away a barrier for many considering selling their homes, with the average property turning over every 12 years, compared to some years ago when they would change hands around every seven.
The state and federal governments would need to cooperate for the plan to succeed.