Nix stamp duty calls are not new to Australia, with many economists calling the tax unfair and damaging. But who wins when the stamp duty is abolished and who loses?
In a commentary for the Real Estate Institute of Australia (REIA), Ray Ellis, CEO of First National Real Estate, said first-time homebuyers would benefit the most if the stamp duty was removed .
"First-time homebuyers would definitely be beneficiaries because they wouldn't need to save so much money to buy their first home", a- he declared.
Empty nesters will also benefit, as it will also be easier for them to reduce their size. This would therefore benefit young families, as larger houses with larger backyards would be released.
There are proposals to replace the stamp duty with a general property tax. However, Ellis said this would put Australians who are rich in assets but poor in cash at a disadvantage.
"These are the people who budget carefully so that they can stay in their beloved homes, close to family, friends and essential amenities. Millions of Australians, including this group, would be required to pay bills equivalent to advisory rates annually, or potentially much more, ”he said.
Ellis said this raises concerns about whether these Australians would be subject to double taxation or whether they would be forced to sell. Plus, he expects this to force older Australians to consider reverse mortgages.
Property tax – fairer approach?
A draft report from the NSW Review of Federal Financial Relations indicates that a property tax would be a more equitable approach to funding government services, based on the "recipient pays" principle.
“The value of land is a measure of the benefits that flow from infrastructure, services, regulations, access to markets, amenities, culture and community to particular places. A property tax is therefore like a benefit the society as a whole provides the landowner, which is a reasoned way of financing public services, ”the report states.
Ellis, however, said going the property tax route could mean a sudden budget deficit just when a significant investment in COVID-19 recovery programs is needed.
"It is, of course, essential to consider tax reform, but Australia must ask itself the question: would swapping stamp duties for property taxes be good policy, or just a contemporary response to the national COVID-19 crisis? " he said.
Adrian Kelly, chairman of REIA, said in a recent report that economic activity in Australia could be raised by shifting the tax composition from high economic cost state taxes to low cost taxes. lower cost throughout Australia.
"As the report notes, state governments cannot eliminate inefficient taxes without going into deficit or having to dramatically cut spending. Therefore, cooperation between the Australian government and the states is needed to undertake a reform of inefficient state taxes, "he said.
Another popular proposal is to raise stamp duty revenue by broadening the goods and services tax (GST) base over the medium term.
Citing data from Deloitte Access Economics, the Property Council said that replacing the stamp duty with a broader GST base could increase consumption by $ 6 billion to $ 9.6 billion per year.
"This reform is in line with the recommendations of the Henry Tax Review and recognizes that generalized property taxes will not be sufficient to replace stamp duty revenue, as demonstrated by the unsuccessful attempt of the ; ACT to do it, "the board said.
Ellis believes it is crucial to understand the implications and outcome of these proposals.
"With billions of dollars at stake, our country must be sure that the policies it chooses today will be even better for tomorrow," he said.