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As New South Wales looks to overhaul its stamp duty structure, one advocacy group has acknowledged that while such a dramatic reform will be tough, it’s too worthwhile to ignore.
The Housing Industry Association (HIA) has written a submission to the New South Wales government consultation paper, “Buying in NSW, Building a Future”.
According to HIA chief economist Tim Reardon, “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 argues that “a constant state of paralysis has resulted in a cascading of tax problems, as state governments have 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 added.
According to him, there’s a number of strategies that could be used to abolish stamp duty in NSW, including named phased-in approaches or the “opt in/out” arrangement.
He argues that with all sound economic reforms, the benefits of the reform ensure that households disadvantaged from the change can be compensated.
From his perspective, “the case in favour of reforming stamp duty is so strong that it doesn’t matter which of these options is adopted, as long as stamp duty is abolished.”
Mr Reardon said “penalising households for pursuing home ownership does not lead to good economic or social outcomes”.
Considering the efficiency benefits of the removal of stamp as extensive, the president highlighted how 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.
“Households able to move to a home that suits the size of the family and the location of their employment and studies can lead to a more efficient allocation of public investment in transport infrastructure,” he argued.
In addition, no stamp duty burdens can allow ageing populations to shift closer to family and medical support, which Mr Reardon said would lead to a more efficient allocation of land and healthcare resources.
The president even flagged how moving away from stamp duty can provide better use of land, as it penalises low-value use of land in areas with high land values.
Overall, while there are many “significant” challenges associated with reforming property tax, Mr Reardon believes “in the case for abolition of stamp duty, the end justifies the means”.
ABOUT THE AUTHOR
Grace Ormsby
Grace is a journalist across Momentum property and investment brands. Grace joined Momentum Media in 2018, bringing with her a Bachelor of Laws and a Bachelor of Communication (Journalism) from the University of Newcastle. She’s passionate about delivering easy to digest information and content relevant to her key audiences and stakeholders.
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