Labelling stamp duty “unjust and inefficient”, the president of the Real Estate Institute of New South Wales has called for a major tax reform.
The plights of first home buyers and retirees, and the effects of bracket creep, have been reviewed by the Real Estate Institute of New South Wales ahead of the state budget announcement on 21 June.
REINSW President John Cunningham said the institute has released a comprehensive assessment of NSW tax policy.
“The ultimate goal must be to abolish stamp duty,” Mr Cunningham said.
“It is an unjust, inefficient and market-distorting tax.”
“In the short term, however, that is not possible, as it will require a coordinated and national response utilising non-market distorting taxation processes and positively discriminating toward broad-based taxes as the funding alternative,” he said.
“Nonetheless, there are things we can do, and must do now.”
Mr Cunningham said the NSW government has left stamp duty rates unchanged for more than 30 years and is “reaping the rewards at the expense of ordinary NSW citizens”.
“The NSW Treasurer and Premier must look to the lead of federal Treasurer Scott Morrison, who recognised the burden placed on middle [class] Australians through bracket creep and lifted tax thresholds accordingly,” Mr Cunningham said.
“The NSW transfer duty already collected for the nine months from July 2015 to March 2016 is $6.749 billion,” he said.
Mr Cunningham pointed to the NSW Half-Yearly Review for 2015-16, which shows that stamp duty revenue in 2015-16 is forecast to be $863 million higher than at budget at $7,841 million, while land tax revenue in 2015-16 is expected to be $104 million higher than at budget at $2,764 million.
“Based on Domain Group’s March 2016 house price data, stamp duty of $31,827.50 would be payable on a property at the median Sydney house price of $807,500,” he said.
“On a house price of $1 million, the stamp duty payable is $40,490; for houses over $1 million, stamp duty payable is 5.5 per cent up to $3 million, and thereafter the rate becomes 7 per cent.
“This means that after the stamp duty is paid, a man or woman on an average wage (currently around $75,000 to $77,000) would have to work for five to six months in order to just pay the stamp duty.”
The REINSW president said the barrier to entry has become unjust and disproportionate over time.
“It is too much and is distorting social fortunes and creating a range of social challenges and consequences for young, middle-aged and elderly people,” he said.
“Now is the time to review stamp duty bracket creep and create an environment that is fair and just for all.”
More to come.