News.com.au’s Julia Corderoy has penned a spurious article heaping praise on the WA Government’s plan to provide stamp duty relief to retirees that downsize:
FINALLY, someone is doing something about the housing affordability crisis. Let’s just hope the rest of the states are brave enough follow suit.
West Australian Premier Colin Barnett has promised a $15,000 stamp duty discount for seniors who want to downsize — the nation’s most substantial concession of its type…
This is a significant announcement for housing affordability because the high cost of stamp duty is widely regarded as a major force driving skyrocketing house prices.
By discounting the tax for seniors, they will be more incentivised to downsize, thus getting the supply chain moving.
“Transfer duty creates a significant barrier for seniors over 65 on fixed incomes who are looking to change their lifestyle or down size. The cost of transfer duty on a median house price of $520,000 is $18,715, which is almost equivalent to the entire annual standard aged pension of $20,745.40,” Real Estate Institute of Western Australia (REIWA) President Hayden Groves said…
The Housing Industry Association (HIA) has also lauded the promise as groundbreaking for affordability…
REINSW is calling on the NSW government to provide retirees with a 50 per cent reduction in stamp duty for a residential property purchased to replace an existing residential property up to the value of $1 million…
Your move, Premier Berejiklian.
As I argued on Wednesday, this is incredibly inequitable policy. While it is true that stamp duties are egregious and inefficient, it is bad policy to provide relief to retirees only, whilst continuing to financially penalise young families upgrading to more suitable accommodation.
The cost to the WA Budget from this policy is estimated at $303 million and this revenue will need to be made up by younger WA taxpayers, thus increasing the tax burden of the very segment of society (young families) that are arguably already under the most financial strain.
Indeed, the above quote could just as meaningfully read:
“Transfer duty creates a significant barrier for
seniors over 65 on fixed incomesyoung growing families under financial pressure who are looking tochange their lifestyle or down sizemove into more appropriate accommodation. The cost of transfer duty on a median house price of $520,000 is $18,715, which isalmost equivalent to the entire annual standard aged pension of $20,745.40more than a quarter of the median Perth household’s annual after-tax income,” Real Estate Institute of Western Australia (REIWA) President Hayden Groves said…
In short, why are retirees more worthy of stamp duty relief than young growing families?
Housing mobility is a two-way street. For the housing market to function properly, it needs both baby boomers to be able to move freely out of their large family homes and young families trapped in smaller homes to be able to freely move.
Therefore, if the Western Australian Government truly wants to encourage housing mobility, then it should remove stamp duty for all cohorts.
What it definitely shouldn’t do is create a special class of citizens in the form of home owning retirees, many of whom also had the good fortune of purchasing their homes cheaply (and paying minimal stamp duty) before they skyrocketed in value, to the detriment of the generations that followed.
If the WA Government is concerned about revenue losses from extending stamp duty relief to all buyers, then it should look to replace stamp duties with a broad-based land tax, subject to transitional measures explained here.
