Stamp Duty Doubles In 8 years

Posted on 5/07/2018  
Stamp Duty Doubles In 8 years

A new report has highlighted the massive levels of stamp duty paid by Australians – and the reliance of state governments on this source of revenue.

The Housing Industry Association (HIA)’s Stamp Duty Watch report reveals that Australian property buyers spent a record $21.3 billion in stamp duty to state and territory governments in FY2018.

The report finds that stamp duty revenue has doubled over the past eight years and tripled since 2002.

It now accounts for 26% of state taxation revenue and recent state budgets indicate that stamp duty revenue will increase a further 11% over the next four years, reaching $23 billion in FY2022.

“This has added considerably to the cost of buying a home and represents a real setback for affordability,” says Shane Garret, senior economist at the HIA.

“State governments are more dependent on stamp duty than at any time in the last decade. Stamp duty is notoriously unstable and Australia’s largest states are heavily exposed to any downturn in duty receipts should economic conditions change.”

Garrett says housing affordability and the sustainability of government finances would both be winners if stamp duty was replaced by better revenue-raising designs. “Australian governments really need to tackle this issue once and for all,” he says.

The report also examines the increased stamp duty imposed on foreign investors. It says offshore investors have been a key factor in creating new development, which has increased economic activity, created jobs and increased the pool of properties available for Australian buyers and tenants.

Recent increases in taxes on foreign buyers has sharply reduced their level of investment in Australian projects, which has caused numerous developments to be scrapped.

Garrett says stamp duty for foreign buyers can be as high as 12.6%. On a Sydney apartment priced at $719,000, a foreign investor can pay a total of $90,365. In other states, foreign investors can pay $75,000 in Melbourne, $43,200 in Brisbane and $40,930 in Adelaide.

In January 2019, Western Australia will introduce a stamp duty surcharge of 7% for foreign investors; for a unit costing$406,000, foreign investors will have to pay $46,760, or 11.5% of the value of the unit.

"The timing of this intervention is particularly unfortunate given that there are tentative signs that WA’s new home building downturn is coming to an end,” the HIA report says. “Imposing such a punitive tax at this stage risks stifling any recovery.”

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