Experts are urging the Queensland state government to follow New South Wales’ reforms on stamp duty.
Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said the 2022-2023 Queensland State Government Budget failed to address stamp duty reforms and any other housing plans that would help boost homeownership in the state.
“Stamp duty significantly hinders home ownership, discourages housing turnover, and restricts mobility, and its abolishment would open doors in Queensland for many,” she said.
“That’s why we’ve long advocated for a 10-year phase-out program and eventual abolishment of stamp duty by first introducing stamp duty exemptions allowing older Queenslanders to ‘right size’ into more suitable homes, and ultimately, replacing stamp duty with a broad-based land tax.”
Recently, the New South Wales state government announced the First Home Buyer Choice initiative, which would provide borrowers with an option to pay an annual land tax instead of paying stamp duty upfront.
RSM partner Sam Mohammad said it is disappointing that this year’s Queensland State Budget was not able to shed light on stamp duty reforms, especially given NSW’s announcement and the overall impact of rising house prices amid increasing interest rates.
“Despite the swelling of the state’s coffers due to stamp duty, none of the additional revenue is to be returned to Queenslanders in the form of stamp duty relief — once again, stamp duty remains the forgotten child in Queensland from a tax reform perspective,” he said.
“By contrast, resonating strongly with most tax experts, first-home buyers and industry groups, New South Wales’ alternative system of an opt-in land tax could make home ownership more accessible, support household mobility and better facilitate economic growth and prosperity for Queensland, and we would like to see this canvassed beyond the Queensland Budget.”
Mr Mohammad said Queensland’s top marginal stamp duty rate of 5.75% remains one of the highest in the country, with the state also having the widest stamp duty base of any state.
“This year’s stamp duty revenue is expected to be over $6bn, well in excess of the $4.6bn predicted in last year’s budget,” he said.
Lack of housing plan
Ms Mercorella said while the Henry Tax Review, which was already delivered over a decade ago, has already identified stamp duty as a bad tax, there are still no plans in place for Queensland to introduce any reforms.
Ironically, however, the state is planning to introduce a new land tax regime for property investors.
“With over $7.6bn pocketed in property related taxes, making property the second biggest revenue source behind all mining royalties, it’s disappointing that we’re not seeing this being reinvested in projects and initiatives to alleviate the pressure on housing,” she said.
During the 2021-2022 Budget Update, the Queensland government announced changes that will see property owners pay land tax at a rate that considers all their landholdings across the country. This means that interstate properties will be aggregated to the Queensland landholding in determining the applicable land tax rate.
“Slapping yet another tax on property investors without any consultation with relevant property stakeholder groups is not the creative and positive action we so desperately need if we’re going to tackle housing affordability and supply.”
Ms Mercorella said the state budget was not able to come up with other creative solutions to assist Queenslanders towards homeownership.
“Despite a construction sector in crisis, and the government itself conceding that builders and building supplies are rare as hens’ teeth, the First Home Owners’ Grant continues to overlook established housing, remaining restricted to new construction,” Ms Mercorella said.
“With rising construction costs and financial entry barriers making building or purchasing a brand-new home is simply unfeasible for many first home buyers, surely, it’s time to extend this initiative to established housing options.”
Photo by @joshwithers on Unsplash