21/05/2002 - 22:00

Anger at stamp duty slug

21/05/2002 - 22:00


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THE Property Council has attacked Government plans to increase stamp duty on property conveyancing.

Anger at stamp duty slug
THE Property Council has attacked Government plans to increase stamp duty on property conveyancing.

Property Council of WA chief executive officer Joe Lenzo warned that any increase in stamp duty would affect the value of WA’s superannuation funds and property investment.

“Superannuation funds put a high percentage of investment funds into property,” Mr Lenzo said.

“If the Government continues to raise taxes then the property industry becomes less competitive and the returns you get are reduced.

“That means that ordinary people are getting less of a return for their retirement.”

The increase in stamp duty will affect residential property, however the Property Council claims it also will deter investment in shopping centres, offices, showrooms and factories.

“The budget sends the wrong message to investors – a forward-thinking Government would be bound to cut stamp duty to encourage jobs and wealth in WA,” Mr Lenzo said.

“It gets back to the same old question: is property an easy asset class to tax?

“It’s a soft touch because it’s a fixed investment.”

But it’s not a bottomless pit, warns Property Council of WA president Tony Packer.

“I think it will be phased out eventually but the problem is, it does pay a lot of State revenue,” Mr Packer said.

“Property taxes in WA are higher than mining royalties, so if you get rid of stamp duty there’s a hell of a void to fill.

“The Government needs to start a program to phase out stamp duty because at some point it will be forced to phase it out.”

Pressure from the Property Council and commercial property players has pushed the Government to announce amendments to the stamp duty on wholesale investment funds in WA.

The Government claims the decision is the result of concerns raised by the commercial property industry regarding the manner in which property trusts with a small number of direct unit holders are treated as private unit trusts and subject to full conveyance duty.

“We are the third highest taxed State in Australia (and) every State competes for capital,” Mr Packer said.

“We’re now seeing a lot of financial institutions investing overseas.

“WA has to be nationally competitive and the whole of Australia needs to be internationally competitive.

“Individual and institutional investors will go where they see incentives and growth.”

“What’s happened is that the WA Government, for a number of years, has been double dipping,” AMP Henderson portfolio manager Louise Joslin said.

“Funds like us say we won’t invest.

“Also what this means is that you’ve actually got a weaker pool when you look at trading property so it discourages other investment in the market.”

Dale Alcock, one of WA’s biggest home-builders, also expressed concern at the impact of increased stamp duty on the purchase price of a house.

“It seems that the Federal Government is trying to encourage first home buyers with initiatives such as the first home owner’s grant while the State Government has found another way to slug them,” Mr Alcock said.


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