Scrap stamp duty for property tax for everyone: Grattan Institute
New research conducted by Newgate Research shows Australians dislike stamp duty when asked to rank taxes in terms of fairness.
Stamp duty comes last, closely followed by land tax.
Over two-thirds of Australians support the idea of abolishing stamp duty completely, with over half saying it made it harder for them to afford a home.
Some 65% of respondents also rated the GST fair or very fair, with 72% believing the GST will probably or definitely be increased over the next decade.
State governments could boost the efficiency of the economy by $9 billion a year if they adopted a wider tax on all property while phasing out stamp duty, a new policy paper suggests.
Property Taxes, the second working paper in Grattan’s Budget Repair series, finds that a levy of just $2 for every $1000 of unimproved land value would raise $7 billion a year with an annual charge of $772 on the median-priced Sydney home, $560 on the median-priced Melbourne home, and lower average rates in other cities and the regions.
The Grattan Institute has suggested a tax levied on the value of property holdings would be a fairer way of funding the burden of health and education services that are rising faster than gross domestic product.
Property taxes – which Grattan institute director John Daley concedes are politically difficult to impose – are positive economically because they don't distort incentives to work, save or invest.
"Unlike capital, property is immobile – it cannot shift offshore to avoid higher taxes," the report said.
The Grattan Institute estimates that an annual levy of $2 for every $1000 of unimproved land value – or $1 for every $1000 of capital improved property value – would raise around $7 billion a year.
A homeowner living in a median-priced Sydney home of $772,000 would pay a levy of $772 a year. Their Melbourne equivalent would pay $560 and those on low incomes with no wealth would pay nothing, while low-income retirees with valuable houses could defer paying until their homes are sold, John Daley argues.
Mr Daley says that even higher property taxes could be used to pay for a reduction and eventual scrapping of stamp duties, which he described as among the most inefficient and unfair taxes still available to states, as well as being linked to property market volatility.
"Shifting from stamp duty to a broad-based property tax would provide a more stable tax base for states, spread the tax burden more fairly, and add up to $9 billion annually to GDP," Mr Daley said.
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