A recent debate in the state parliament of Western Australia could seal the fate around discussions of the current rebate on stamp duty for new multi-dwelling developments.
The Liberal Party has confirmed that it would scrap several tax policies currently in place in the state, including the 75% stamp duty rebate for off the plan apartments and the surcharge on foreign buyers.
Sandra Brewer, director at Property Council WA, said government legislators need to have a more honest dialogue about the impact of stamp duty on the state's property industry.
"We have been encouraged by some of the proactive measures taken by the McGowan government in recent times on stamp duty. The 75% stamp duty rebate for off the plan apartment purchases is a great start, and we have asked the government to consider sensible adjustments to those measures," Brewer said.
Off the plan tax relief
The government announced the stamp duty rebate for off the plan units late last year. Under the scheme, property buyers who sign a pre-construction contract to purchase a new apartment for the next two years are eligible for as much as a 75% stamp duty discount. The discount will also be applied to foreign property surcharge.
The relief could mean savings of over $9,700 for buyers targeting a $400,000 apartment.
Real Estate Institute of Western Australia (REIWA) president Damian Collins said the move was a "win for the sector".
"By reducing the tax for off the plan sales, not only will it help the government to meet its target of 47% of new dwellings in infill locations, but will help increase the speed of transition from apartment sales to actual construction activity," he said.
Meanwhile, State Treasurer Ben Wyatt said he is "perplexed" about the Liberal Party’s plans to abolish the stamp-duty rebate.
"In government, they increased land tax dramatically that has had a long-term impact on the WA property sector and yet now want to scrap key policy initiatives that have been fundamental to the recovery we are beginning to see in the property sector," he said.
Wyatt also argued that the plans of removing the surcharge for foreign buyers might create a $70m budget black hole.
Brewer said Wyatt is aware of the Property Council’s "lingering concerns" on the foreign buyers’ surcharge and the potential for a further adjustment in the stamp duty rebate. She also called on the state opposition to declare its position on WA property taxes.
"By committing to remove the foreign buyers surcharge and maintaining the 75% stamp-duty rebate as a minimum, the opposition can demonstrate its support for the industry that employs more Western Australians than mining and manufacturing combined," she said.
Also read: Stamp Duty Triples In Capital Cities
Stamp duty — a punitive tax?
In a separate statement, Urban Development Institute of Australia (UDIA) said stamp duty is one of the most inefficient taxes in Australia's economy and is a substantial barrier to homeownership.
"Stamp duty hurts people trying to enter the housing market, families moving into bigger houses as they grow and seniors looking to downsize later in life," said Connie Kirk, national executive director of UDIA.
Kirk said while stamp duty remains a volatile tax that depends on the housing cycle, state governments have become overly reliant on it to sustain their budgets.
"We appreciate any substantial tax reform is a long-haul exercise, but it is time for governments to start planning for a switch from stamp duties to more broad-based measures such as land tax. An overhaul of property taxes is well overdue given the excessive burden carried by the industry and homebuyers," she said.