28/03/2006 - 21:00

Tax reform a hit and miss

28/03/2006 - 21:00

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Property industry representatives remain skeptical of any real benefits to homebuyers as a result of the State Government’s tax reform plans announced last week.

Tax reform a hit and miss

Property industry representatives remain skeptical of any real benefits to homebuyers as a result of the State Government’s tax reform plans announced last week.

Tax relief measures include the complete removal of mortgage stamp duty by July 2008, with a 50 per cent interim stamp duty relief on July 1.

Property Council executive director Joe Lenzo said in a statement that despite the scrapping of several ‘nuisance’ taxes, the measure was only a part fulfillment of the GST trade-off because it did not include the abolition of stamp duty on commercial properties.

The Property Council believes the government has an obligation to make structural reforms to its key taxes like stamp duty on property purchases and land tax, which account for almost half of total state taxes.

“The decision to cut stamp duty on mortgages represents less than three per cent of the annual revenue from property taxes,” Mr Lenzo said.

Master Builders Association housing director Gavin Forster agrees that removing the stamp duty on mortgages is just a “drop in the ocean” in light of what the industry contributes to government coffers.

“It’s certainly a positive step but the issue of housing affordability remains,” he said.

REIWA welcomed the announcement but president Greg Rossen expressed similar concerns for property owners and homebuyers who may be paying a disproportionate amount of tax into state coffers due to the sharp increases in stamp duty in recent years.

Mr Rossen said it was getting harder for first homebuyers to stay under the tax free threshold of $250,000 on which no stamp duty is payable.

He believed the excessive tax was an extra hurdle for people wanting to trade up to another property.

“The area of tax most in need of reform is not stamp duty on mortgages, but stamp duty on conveyancing,” he said.

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