The Real Estate Institute of South Australia and the Real Estate Institute of Australia argue for an adjusted GST to replace stamp duty revenues.
The Real Estate Institute of South Australia and the Real Estate Institute of Australia have given a joint submission to the South Australian government's tax review. REISA and REIA state that while they fully support the need to abolish stamp duties, they disagree with replacing the revenue forgone with land tax "because in shifting the burden of tax from purchasers to all owners a number of consequences arise which have a deleterious impact on sections of the community."
"As house prices increase over time, unadjusted progressive tax rates also increase the tax burden associated with stamp duty," the submission states. "This adds to transaction costs and contributes to the high costs of moving which discourage mobility, impedes economic growth and leads to an underutilisation of the housing stock as older residents are reluctant to downsize."
REISA and REIA do not recommend South Australia act unilaterally in abolishing stamp duties, but instead seek to have an agreed timing across all states and territories. They also believe this lost revenue should be replaced by an adjusted GST. They don't support the introduction of a land tax because one of the consequences of introducing a land tax after a history of stamp duty is that property values fall as the value of future taxes are factored into home prices. They also note that currently in South Australia, investment properties with a land value below $316,000 are exempt from land tax, and if it were introduced on these properties, rents would invariably rise as a result.
The submission also cites the ACT example, where in 2012 the ACT Government announced that it will abolish conveyance duty over a 20 year period with an initial 5 Year Plan. At the same time general rates were increased for all property with a land value above $200,000 including by a greater proportion for higher valued properties and will progressively take this approach over 20 years. The submission states that this has shifted the burden of tax from purchasers of property on to all owners of property, and "caused much consternation in the electorate."