Major states want stamp duty axed

The NSW and VIC state governments have reportedly joined forces to axe stamp duties in favour of an annual land tax:

Stamp duty would be gradually replaced by an annual land tax and home buyers could “opt in” to a new property system or receive a credit for past duties, under reform options for the NSW and Victorian governments…

Stamp duty would be gradually replaced by an annual land tax and home buyers could “opt in” to a new property system or receive a credit for past duties, under reform options for the NSW and Victorian governments.

Stamp duty would be gradually replaced by an annual land tax and home buyers could “opt in” to a new property system or receive a credit for past duties, under reform options for the NSW and Victorian governments…

PwC tax partner Paul Abbey said stamp duty was “easily our worst tax” nationally and should be phased out for future home buyers.

Specific reform options include:

  1. giving future home buyers the right to choose between paying stamp duty upfront or opting in to pay an annual land tax of a few thousand dollars each year; and
  2. allowing state governments to convert the future land tax streams into revenue by borrowing through securitisation; or
  3. paying a credit for stamp duty to anyone who bought a home in the last five years.

Personally, I prefer the idea of giving home buyers a credit for the stamp duty already paid, and then deducting the theoretical land tax that would have applied since the home was purchased.

For example, if someone purchased a home in January 2015 and paid $30,000 in stamp duty, and their annual land tax bill would have been $3,000 per year had the new regime been in effect, then their credit would be $15,000, which can be applied against future years’ bills.

This approach is similar to point 3 stated above, except that it would likely provide compensation beyond five years, thus making it fairer to recent buyers.

Leith van Onselen

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