Latest NewsTreasury Boss Wants to Abolish Real Estate Stamp DutyWednesday, 09 August 2017

The Treasury boss, Martin Parkinson, has backed a move to wind back or abolish real estate stamp duties saying they make it hard for workers to move west and north to take advantage of the mining boom.

Asked at an Australian Industry Group forum which taxes were the biggest drag on productivity, he nominated state taxes on housing which he said inhibit economic adjustments, "whether they be individual workers moving from the Illawarra to Queensland or Western Australia to work in the mining sector, or whether a firm is trying to restructure its business".

"We need to encourage change, not to stand it in its way. That's why I make specific reference to state governments," he told the conference.

NSW made $3.9 billion from real estate stamp duties in the year to June, about one third of the national total. Abolishing it could be paid for by increasing the goods and services tax by a quarter, from its current rate of 10 per cent to 12.5 per cent.

The Henry tax review reported that "ideally there is no place for stamp duty in a modern tax system". It found they discourage property turnover and penalise property improvements.

"The only positive feature of stamp duty - its relative simplicity - has long since ceased to justify its continued use in the face of the costs it imposes on Australian society," the review said, recommending they be replaced by a broad land tax.

Professor Neil Warren, who reviewed state taxes for the Independent Pricing and Regulatory Tribunal in 2008, told the Herald it was acknowledged by the states that stamp duties should go, but the transition was difficult.

"What about someone who has just bought a house. Does she have to also pay the replacement tax? If so she is taxed twice. If the replacement tax is on land it should be the unimproved value so as not to reinstate one of the faults of stamp duties."

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