One of New South Wales’ peak real estate bodies has called for an immediate review of the state’s stamp duty arrangements.
According to the Real Estate Institute of New South Wales (REINSW), the government’s own budget papers show just how inefficient and restrictive current stamp duty charges are in in the state.
“The NSW Government has openly admitted that taxes imposed on transactions, such as transfer duty [stamp duty] are relatively inefficient, because people react to them by moving home less often,” REINSW president John Cunningham said.
“Over and above the revenue generated, the state-wide economic cost for every million dollars of transfer duty revenue is estimated to be around $800,000,” Cunningham said, citing the NSW Government’s 2016-17 Budget documents.
In comparison, the budget documents show a tax on unimproved land values is more efficient, with the economic cost of NSW’s land tax estimated to be around $90,000 for every million dollars of revenue it generates
According to the budget documents, land-based taxation, which includes transfer duty, land tax and insurance duty, grew on average by 8.2% a year over the last 10 years. The share of total revenue it provides has increased from 12.8% in 2005-06 to 15.6% in 2014-15.
With property taxes providing such a significant portion of the state’s revenue, it’s unlikely the government would abolish them, but Cunningham said a reduction in the cost each property transaction carries would result in a more efficient system.
“We again call for the NSW government to review stamp duty. Based on its own research the government should immediately cut stamp duty to encourage economic activity and address the inequities of bracket creep of this inefficient tax,” he said.
“The state government have openly admitted that additional transactions would result from a reduction in stamp duty and given that stamp duty would be levied on these additional transactions government revenue will not suffer. In-fact it would most likely improve based on similar changes that occurred in Western Australia and the Northern Territory when those states reformed their rates of stamp duty.”
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