The Property Council of Australia has called for the abolition of stamp duty, with the loss in state governments' revenue recouped from an increase in the goods and services tax. It argues stamp duty is inefficient and nothing more than "a runaway cash grab that's hurting Australia's economy and locking out potential home buyers".
In its submission to the Abbott government's tax white paper, the Property Council says the cost of stamp duty to a home buyer with an average-sized mortgage has increased by 749 per cent in Sydney and 795 per cent in Melbourne during the past 20 years. "The community should be outraged that they are being slugged with such excessive charges, especially at a time when housing affordability is an acute challenge," said Property Council chief executive Ken Morrison. But former Liberal NSW Premier Nick Greiner, former Liberal Victorian Premier Jeff Kennett and former NSW Labor Premier Bob Carr have criticised the submission, saying it was a piecemeal idea that neglected the total picture of tax reform. Prime Minister Tony Abbott will meet with state leaders to discuss the future of the taxation system and the federation next month.
Frank Valentic, Director of Advantage Property Consulting, says the people suffering most from rising taxes are first home buyers, who currently occupy a minority of the market at around 12 per cent. "They're aiming for a moving target where house prices and taxes continue to rise and consequently are finding it more and more difficult to get a foot in the door," said Valentic. "While first home buyers can opt for a home under $600,000 to receive stamp duty discounts, many are choosing to buy in established inner city areas where land value usually exceeds this amount.
"Additionally, home owners are choosing to stay put as a result of high taxes, allocating their finances on renovating their existing properties instead of moving house. Consequently, owner-occupiers are now staying in their homes for longer at an average of 13 years as opposed to 7 years, which can have a negative impact on the property market in terms of there being low supply and high demand in the market.”