THE huge cost of stamp duty is stopping nearly 40,000 Australian home moves each year.
Research has found abolishing the tax could help ease the housing squeeze, allowing younger families and older retirees to more easily find more suitable housing.
The total loss to the economy from reduced sales is worth around half a billion a year, according to the study by two prominent Australian economists based on millions of property transactions.
State governments receive around $12 billion a year in stamp duty revenue, but this has fallen in recent years because stagnant house prices have led to fewer transactions.
People who do move are now paying more, on average, because higher house prices push them up into higher stamp duty tax levels.
"The average stamp duty rate on house sales rose from 2.4 per cent in 1993 to 3.3 per cent in 2005 largely due to 'bracket creep' during a period of rapid house price growth rather than legislated increases in rates," the study by economist and Labor MP Andrew Leigh and Ian Davidoff, a former adviser to Julia Gillard and now an economist at the International Monetary Fund in Washington DC, found.
I agree with this, stamp duty is one of the few things that could be changed so that housing can be cheaper while not penalizing existing owners. changing it won't effect current owners profit since it isn't paid to them anyway, and reducing it lowers to overall up front cost to buyers.
the problem is it's too much of a cash cow for state governments, they need to be weened off this kind of unproductive taxation.
I am the love child of Tony Abbott and Pauline Hanson
They should put GST up to 12.5% and remove all stamp duty (with agreement of State govts of course).
Why stop at 12.5%? It's not like the general goods economy is very important anyway, you know, food, clothing etc. They could put GST up to 47% and plough the proceeds into first home owner grants. I reckon they could get the grant up to 100K or even 200K! Can you imagine how affordable housing would become if there was a FHOG of 200K!!?? We would have the most affordable housing in the world if they did that.
What's to say they won't agree to it at the time, then when the increase comes, the states all reneg again?
They didn't reneg for no reason; initially GST was supposed to be on everything, but to get it through the senate the gov did a deal with the Democrats (who had the balance of power in the senate), which exempted "fresh" food, health, education, and a few other things. The result was that the GST revenue was cut by a about 30%. This meant the states couldn't get rid of all the axes they said they would, stamp duties on propertiy and car transactions being the main ones. We did get rid of FID, BAD (bank account and deposit transaction levies), stamp duty on share transactions, and a bunch of other stupid taxes we used to all pay.
The only fix is to either raise the GST rate, or broaden its base.
Why stop at 12.5%? It's not like the general goods economy is very important anyway, you know, food, clothing etc. They could put GST up to 47% and plough the proceeds into first home owner grants. I reckon they could get the grant up to 100K or even 200K! Can you imagine how affordable housing would become if there was a FHOG of 200K!!?? We would have the most affordable housing in the world if they did that.
Something I've always wondered. Is removing stamp duty the same as giving fhb grants or any grants?? Does it have the same effect? Or do fhb grants allow you to multiply the amount you can borrow?
Whenever you have an argument with someone, there comes a moment where you must ask yourself, whatever your political persuasion, 'am I the Nazi?'
I agree with this, stamp duty is one of the few things that could be changed so that housing can be cheaper while not penalizing existing owners. changing it won't effect current owners profit since it isn't paid to them anyway, and reducing it lowers to overall up front cost to buyers.
the problem is it's too much of a cash cow for state governments, they need to be weened off this kind of unproductive taxation.
I have seen lots theorise that removing SD will not make housing cheaper. Housing will simply be bid up to include the old SD price. Who knows.
SD revenue stream for the states would need to be replaced by another tax, depending on what it's replaced with it could be seen to penalise existing owners. If it was replaced with an expanded broad based land tax then people who bought recently would feel ripped off. If it was replaced by an unrelated tax, eg GST increase then there would be no penalty.
Either way it's 'unproductive' and needs to go. It discourages people to consume an appropriate amount of housing in an appropriate area. It encourages oldies to stay in a house that is way too big for their needs. It discourages growing families from moving to somewhere a big bigger. It encourages someone who has a new job on the other side of a city to stay put where they are and put massive strain on road infrastructure.
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