The debate around the future of stamp duty needs to realistic according to the head of one of New South Wales’ peak real estate bodies.
Property lobby groups and the wider real estate industry have long rallied for the levy to be abolished, but Real Estate Institute of New South Wales (REINSW) president John Cunningham has said there needs to be a realisation that stamp duty will not be removed in isolation.
“It’s not going to be done in isolation; the government will not do away with stamp duty in any shape of form unless there are other revenue options,” Cunningham said.
“Unless there is an appetite across the nations to start looking at it from a realistic point of view, in other words look at the big picture, then there’s not going to be any change,” he said.
Ahead of the NSW state budget being handed down on 21 June, the REINSW has released its taxation policy which Cunningham believes presents a number of alterations to current arrangements that would lessen the burden on buyers and sellers while maintaining the government’s revenue stream.
Firstly the REINSW believes NSW’s current stamp duty brackets, which have remained as is for 30 years should be addressed.
“In 1986 they changed the stamp duty rates and they haven’t looked at them since and currently this is probably the worst example of bracket creep ever seen,” he said.
“You’ve gone form an average of 2% of the value of property in 1986 to close to an average of 4% of the value of property today.”
The REINSW proposal would alos see first home buyers and downsizers receive a 50% discount their stamp duty bills for properties valued $1m or less.
Cunningham said those two proposals would see stamp duty bills lessen for each sale, but increased transactions would keep revenue flowing to the government.
“Stamp duty revenue is based on two things; activity in the marketplace or value increases.
“We’ve just had a massive value increase which has prompted the stamp duty revenue increases, on the flip side of that we’ve actually seen less transactions occur in the market place.
“Our suggestion is if you want to get activity going, then give some concessions to the first home buyers and give some concession to the downsizers.
“When they did similar things in South Australia and the Northern Territory activity actually increased and they generated more revenue through stamp duty.”
The REINSW claims the a current median priced house in Sydney would come with a stamp duty bill of more than $31,200, while the state government is expected to pull in $7.8bn in stamp duty revenue over the 2015-16 financial year.
While it may seem like their stance towards stamp duty has softened, Cunningham said the REINSW was simply taking a sensible approach to the issue and that the proposed changes could be the starting point in the removal process.
“Yes we’re opposed to stamp duty, but we’ve also suggested in our policy some solutions to the issue.
“It’s such a huge windfall for the government and it’s basically funding their whole infrastructure plan so on one side you have to say that money does have to come from somewhere, taxes have to be levied in various places.
“We believe the tax debate has to include all these things; it can’t just be looking at one thing in isolation.”
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