Politicians are uniting in agreement to take away the stamp duty. Greens, Labor and Liberal party members have joined together to end the stamp duty that many Australians have been griping about for years. Doing away with the stamp duties will be part of a broader reform on taxes to create a more efficient taxation system. The Senate Economics References Committee’s inquiry into affordable housing came to the final conclusion that the stamp duty was “flawed” as a form of revenue. The SERC’s report summarised that the inefficient stamp duty was a hindrance to home buyers that actually created more barriers of entry to home buyers and was in fact a “damaging form of taxation”.
Discussing the Stamp Duty Reform
Having stamp duties not only makes houses less affordable but distorts what choices home buyers have along with making land use less efficient in general. If houses are less affordable and home buyers’ choices are distorted then they are less flexible as buyers. The workforce being deterred to relocate makes the labor market less mobile which dampens the economic productivity that Australia so desperately needs right now.
On the plus side, the stamp duty has generated huge revenues for the state governments and so the problem of replacing that missing revenue will have to have a solution that is not a new burden. Broader land taxes are one solution being considered but it might be unfair to those owner-occupiers who are asset rich but income poor such as retirees. The goal is to phase out the stamp taxes in a way that is revenue neutral while at the same time being positive to housing affordability.
Although the stamp duty is a land tax and that is a state issue, the broader tax reforms will be lead by the federal government to ensure that the new regulations are coordinated and implemented efficiently. The politicians from these parties seem to believe that this will be the best way to help more buyers enter the property market. Home buyers will soon be able to look forward to a stamp duty free property price but rest assured that the state governments will still get their revenues, if only later through other forms of land taxes. The property market is sure to see the effects of the removal of the stamp duty as soon as it is gone.