From the HIA comes yet another whinge about the high cost of stamp duties:
The latest edition of the HIA Stamp Duty Watch report has revealed that stamp duty is now costing the typical Australian family over $1,200 in additional mortgage repayments each year – $100 every month.
“The burden of stamp duty has grown much heavier during 2016, with strong dwelling price growth translating into disproportionately larger hikes in the stamp duty bill for homebuyers,” explained HIA Senior Economist, Shane Garrett.
“Stamp duty is now setting ordinary homebuyers back by an average of $19,975. This eats up home purchase deposits and forces families to take on much larger mortgages, with total loan repayments typically rising by around $36,000 over a 30-year term. The cost is even greater when the impact of the higher Lenders’ Mortgage Insurance premiums is added on top,” explained Shane Garrett.
“Stamp duty hurts families and acts as a barrier to employment mobility and retirement downsizing. A plan for its removal needs to be at the centre of a national housing affordability strategy. The large states’ coffers have benefitted heavily from the stamp duty windfall in recent years. Perhaps now is the time to offer some relief,” concluded Shane Garrett.
Based on dwelling prices during November 2016, the typical stamp duty bill nationally is $19,975 which is an increase of 7.4 per cent on a year earlier. The average stamp duty bill is currently highest in Victoria ($28,538), followed by NSW ($24,965) and the Northern Territory in third place ($20,805). The stamp duty bill on the purchase of a median-priced home is $17,960 in the ACT, $15,830 in South Australia and $15,390 in Western Australia. Queensland remains the state with the lowest stamp for a typical purchase ($6,825) followed by Tasmania ($9,135) with the second lowest stamp duty costs.
I live in Melbourne, and have experienced the stamp duty gouge first hand, so you will get no disagreement from me.
Still, there is no point in the HIA complaining about stamp duties unless it can recommend an alternative revenue source for the states, which need to fund the population ponzi that the HIA loves so much.
The logical choice for shifting state tax bases away from stamp duties is to replace them with a broad-based land value tax.
The Australian Treasury has already shown that stamp duties on real estate are one of the least efficient taxes going around whereas land taxes are the most efficient source of tax available, actually creating positive welfare gains to the domestic population since non-resident home owners are also taxed (see below chart).
The Henry Tax review came to similar findings. As has the Productivity Commission.
The HIA’s Dr Harley Dale has also previously called for the exchange of stamp duty for land tax – a stance that deserves applause – and re-statement by Mr Garrett.
