The Housing Industry Association (HIA) has renewed its calls for the state government of New South Wales to abolish stamp duty.
Tim Reardon, chief economist of the HIA, said the end justifies the means when it comes to ending the stamp duty.
"The case in favour of reforming stamp duty is so strong that it does not matter which of these options is adopted, as long as stamp duty is abolished," he said.
In November, State Treasurer Dominic Perrottet announced a proposal to make stamp duty on property purchases optional.
Under the proposed arrangement, buyers will be able to choose between the current system of paying stamp duty or paying a smaller annual tax for as long as they own the property. The new property tax will be a fixed charge, with a rate calculated based on the unimproved land value of the property.
Reardon believes stamp duty has resulted in a “constant state of paralysis”, as state governments become increasingly dependent on stamp duty for revenue.
“This is despite stamp duty being universally recognised as one of the most inefficient and inequitable taxes that does not provide a stable revenue stream,” he said.
Reardon said numerous strategies that can be pursued to abolish stamp duty including the phased in approach or an “opt in or opt out” arrangement.
"In replacing stamp duty with a more stable, efficient and equitable tax we should remain focused on the benefits of the reform, not the complexity of the transition," he said.
Furthermore, Reardon said there are extensive benefits in removing the stamp duty.
"A workforce able to relocate in the pursuit of education and employment opportunities, without incurring punitive taxes, supports a range of family and community goals," he said.
Abolishing the stamp duty enables households to move to a home that suits the size of their family and the location of their employment and studies. It also allows the ageing population to move closer to their families and medical support.
"A switch away from stamp duty also offers a better use of land as it penalises low-value use of land in areas with high land values," Reardon said.
Top Suburbs :
Get help with your investment property
Do you need help finding the right loan for your investment?
When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.
Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.
We value your privacy and treat all your information seriously - you can check out