Governments should consider replacing stamp duty with a broad-based land tax, according to Westpac Chief Executive Brian Hartzer.
Abolishing stamp duty could address the high cost of housing, allowing more first-home buyers to enter the market, he said.
The recent price decline has made housing “a bit more affordable” for first-home buyers. However, there is still a need for other changes to make homes more affordable in the longer term, with prices in Sydney and Melbourne stabilising, Hartzer said.
“The big upfront cost of buying a home – particularly stamp duty – is both a barrier for buyers and a disincentive for people to sell a home that’s bigger than they need (since they would incur stamp duty when they move)," Hartzer said.
Shifting from stamp duty on purchases to a broad-based land tax would ease the big upfront cost of buying a house and provide governments with stable revenue, according to Hartzer.
Introducing a broad-based land tax could be “politically difficult”, but it was “worth considering if we’re going to help more Australians into their homes,” he said.
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