In its 2016 budget paper, the NSW government has acknowledged that property transfer duty is an inefficient tax, according to the Real Estate Institute of NSW.
REINSW president John Cunningham said that the NSW government has openly admitted that taxes imposed on transactions, such as transfer duty, are relatively inefficient.
“People react to them by moving home less often,” Mr Cunningham pointed out.
Referring to the 2016-17 budget documents, Mr Cunningham also highlighted that the state-wide economic cost for every $1 million of transfer revenue is estimated to be around $800,000.
In light of this, Mr Cunningham has called for an immediate review of the tax system.
“We again call for the NSW government to review stamp duty. Based on its own research, the government should immediately cut stamp duty to encourage economic activity and address the inequities of bracket creep of this inefficient tax,” Mr Cunningham said.
He said the state government has conceded that additional transactions would flow from a reduction in stamp duty, and as it would be levied on these additional transactions, government revenue would not suffer.
Mr Cunningham added that government revenue would most likely improve, based on similar changes that occurred in Western Australia and the Northern Territory when these states reformed their rates of stamp duty.
“It’s time to put first home buyers first and provide them with the incentives to purchase property. What further proof does the government need to act?” Mr Cunningham said.