SPECULATION that the State Government will offer stamp duty relief in the budget on May 6 has prompted industry groups to intensify calls for further easing of the burden on property buyers.
Suggestions that stamp duty may be halved for first home buyers is not enough for many property players, however, who say stamp duty increases in the past two budgets have placed an unfair burden on property owners and that the State Government is excessively reliant on stamp duty revenues.
Professor Dominique Fischer from Curtin University said stamp duty was relatively unknown in much of Europe and the US, with the “easier and much smarter system of paying yearly land tax proportional to the value of a house” the system of choice.
“Taxes are universal, they are not popular, and they should be made as efficient as possible,” he said.
“To tax proportional to the value of land is much less painful and remarkable more efficient.”
The Property Council believes State Governments should be required by the Federal Government to return above-budget GST revenues to taxpayers through cuts in State taxes.
Property Council of WA senior policy adviser Geoff Cooper said the abolition of stamp duty on commercial property in Western Australia would encourage a huge amount of investment in the State.
“It [abolition of stamp duty] would create jobs and divert superannuation and investment funds from international and eastern seaboard locations into our local communities,” he said.
“Stamp duty distorts investment decisions away from property. Shares do not face the same tax impost. Capital is mobile and will flow to international and interstate locations if rates are excessive in WA.”
A report by independent economic analyst Access Economics, commissioned by the Property Council, concluded that: “For Australia as a whole, cutting stamp duty on commercial property transfers compares with cuts of the same value in other State taxes delivers more than double the economic benefit available from cutting stamp duty on residential property transfers, and delivers about 60 per cent more in terms of increased GDP than other taxes on property, and even greater gains relative to payroll taxes and taxes on gambling.”
A recent submission by REIWA to the State Government proposed that stamp duty relief should begin with first home buyers, but that the broader property market should also benefit from reductions in property taxes.
“This includes reductions to the top marginal rate of stamp duty, which significantly exceeds the national average,” REIWA president Jim Henneberry said.
“This will make WA more competitive to interstate commercial property investors. The Government should also place a cap on total land revenues, which have blown out excessively.”
Another submission to the Government recommending relief to first home buyers has come from the Housing Industry Association.
The association also suggested the removal of the tax levied on home and land packages.
HIA executive director John Dastlik said the difference in stamp duty rates for first home buyers looking at a house and land package against buying a block and building on it was encouraging urban sprawl, which ultimately ended up being more costly for government.
“If we can encourage more inner-city development for the first home buyer there will be less outer suburbs and therefore less infrastructure that needs to be implemented by government, which will end up saving them much more money in the long term,” he said.
The flow-on effect of recently introduced property taxes in New South Wales was already being felt in other capitals, including Perth, according to Pro Property managing director Brett Wilkins.
“WA’s property market was already benefiting from the general downturn in the Sydney market over the last 12 months, but enquiry levels had doubled again since the imposition of the new tax,” Mr Wilkins said.
Even though the NSW tax reforms remove stamp duty for first home buyers, he said the move had the “potential to create a falsely overheated market and encourage people to buy property when they could not risk a mistake or changes in interest rates or the economy.”
Mr Wilkins said the WA Government should be wary of making this mistake and reduce stamp duty burden across the board.
© Business News 2018. You may share content using the tools provided but do not copy and redistribute.