‘Property tax should be stamped out’
June 20, 2012 Leave a comment
In the wake of the federal budget, First National Real Estate Tamworth principal LIZ SHELTON says the government should have delivered on the GST promise of abolishing stamp duty but home buyers should also do their bit to support the property market. Here’s why:
Australia’s soft property market will continue to tread water unless major changes are made.
We need more new housing stock to come onto the market, indirect costs to be reduced and inefficient taxes like stamp duty to be abolished preferably all three.
And while HECS-like schemes are commendable for assisting home buyers to pay stamp duty obligations, it should be a matter of reducing or, better still, getting rid of stamp duty altogether, and that falls on everyone’s shoulders.
A struggling property market affects all Australians. It is a key driver of the national economy and represents a burden for all to share.
This is why home buyers should do their bit and continue to put pressure on governments to live up to their GST promises.
Property taxes are reducing home buyers’ ability to purchase new homes, whether they are first home buyers, upgraders, downsizers or investors.
The real issue for the property market is that buyers aren’t buying, and part of that reason is the exorbitant extra costs associated with buying a property These extra costs mean it is more cost-efficient to consider renovating, or think outside the box and look at dual-occupancy-type solutions.
The excessive cost of developing vacant land has stalled the process of newly built home stocks coming onto the market, which is having a devastating impact on the market overall.
Last year, stamp duty accounted for 37 per cent of total property related taxes in Australia. The reliance of governments on property taxes to boost their coffers should have lessened over time with the introduction of the GST, but the opposite trend seems to be occurring.
We were promised a reduction in taxes like stamp duty when the GST was introduced. Not only has it stayed, nationally, stamp duty has risen, due mainly to increases in NSW and Victoria, according to industry figures.
And yet, property taxes were cut in WA and NT and government revenues actually increased.
What seems to be happening is that stamp duty is putting new homes beyond the reach of many, so fewer homes are selling overall, reducing revenue raised through these taxes. But basic economics is at play here. If the stamp duty was lowered, more homes would sell, and home owners and governments would see increased revenue.
Consideration could also be given to abolishing stamp duty and recouping those lost taxes through a more equitable means where the whole population pays not just those who have saved for a new home.
Perhaps we should increase tax paid on luxury items such as tobacco or alcohol, or fast food items.
Making home ownership too taxing is a short-sighted and quick grab for cash by governments and should be “stamped out”, so that everyone can achieve their home-ownership goals.
Source: Northern Daily Leader, 12 May 2012