Stamp duty here to stay

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This was published 13 years ago

Stamp duty here to stay

By Marissa Calligeros

The state government may change the name of stamp duty, but will never abolish it, one property analyst says.

Speaking to the Committee for Economic Development of Australia late last month Queensland Treasurer Andrew Fraser acknowledged stamp duty, now formally known as transfer duty, as an ineffective "relic".

The government would benefit from decreasing stamp duty, according to property expert Michael Matusik.

The government would benefit from decreasing stamp duty, according to property expert Michael Matusik.Credit: Nicolas Walker

"It's hard to accept that a tax system that relies on the archaic relic of stamp duty to help fund schools and hospitals is the best we can do as a nation," he said.

However, property analyst Michael Matusik said it was extremely unlikely the state government would abolish stamp duty in its current form.

"It raises way too much money for the state government, but they need to change it," he said.

If it were changed or at least decreased, Mr Matusik said, government coffers would actually reap the rewards.

While it would not greatly affect property prices, he said, it would benefit the property cycle.

"People would sell more often, which will reverse the trend, leading to more sales and ironically more money to the government, even despite lower stamp duties per sale," Mr Matusik said.

"Ten years ago, on average we held a property for 6.8 years between sales. Today it is approaching nine years between sales."

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Queensland buyers pay $7432.80 stamp duty for a house valued at $435,000 and a minimum of $10,150 for a house valued at more than $540,000.

"[Scrapping stamp duty] will not really reduce [property] values much, nor rents. It is a cost and is viewed as such, rather than something that impacts on the 'value' of the property," Mr Matusik said.

"The vast majority [of buyers] don't determine the value of a property when looking to buy it, by factoring in the stamp duty that needs to be paid."

It is an insidious tax and an impediment to the property market

RP Data research analyst Cameron Kusher agreed, saying abolishing stamp duty would rather improve the "health" of the property market.

"It would encourage more transactions in the market, because it would boost people's buying power," he said.

The Henry Tax Review recommended reforms to stamp duties in favour of increased land tax.

"Ideally, there would be no role for any stamp duties ... in a modern Australian tax system," the final report said.

"Increasing land tax at the same time as reducing stamp duty has the additional benefit of some offsetting impacts on asset prices."

Mr Fraser said stamp duty could be abolished with the help of the federal government, noting it would be a key talking point at the federal tax summit later this year.

"It can't be done without trade offs, and it can't be done by one level of government acting alone. It can only be achieved through wholesale reform of taxes in this nation," he said.

However federal Treasurer Wayne Swan said stamp duty was an issue for state governments.

“I'm sure a lot of matters will be raised at the forum, and that's great, but at the end of the day state taxes are a matter for the states," he said.

Real Estate Institute of Queensland chairwoman Pamela Bennett said stamp duty needed to be scrapped to improve affordability and provide the market a much-needed boost.

"It is an insidious tax and an impediment to the property market," she said.

Ms Bennett said abolishing stamp duty could lead to prices increasing in the longer term, but not to a great extent.

"There could be an incremental rise over time, but it would not be felt straight away," she said.

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