HOME buyers in the ACT have handed over an eye-watering $2.9 billion in stamp duty payments on property since 2001.
Revenue has doubled from $87 million in the 2001 financial year to $227 million in 2014. If Budget forecasts are correct, it will top $229 million this year.
Relying on homebuyers and business to bankroll the Territory’s Budget is hurting families and holding back the ACT economy.
The Chief Minister has promised that the ACT will have the nation’s lowest stamp duty rates. And yet stamp duty has increased by a whopping 537 per cent in the last two decades.
Home buyers are right to question what they are getting in return for these astronomical increases.
The Federal Treasury has identified stamp duty as the tax with the highest cost to economic growth and living standards. In fact, modelling has found the nation’s economic welfare is reduced by 73 cents for every dollar of stamp duty collected.
Why is this? Because stamp duty acts as a disincentive for people wanting to upsize, downsize or move to places where there are more job opportunities.
Stamp duty distorts business decisions and is a highly volatile revenue stream for governments.
Survey after survey has found Australians want to axe the tax because it’s driving up home prices and making it unaffordable for young people to own their own home.
And yet, state and territory governments remain addicted to stamp duty revenues. New analysis from the Property Council has found that state and territory governments are collectively on track to reap a record $20 billion in stamp duty for the current financial year alone. That’s a threefold increase in 14 years.
Tax reform is emerging as a massive challenge not just in the ACT, but around the country. If we are to get serious about reforming our taxation system to encourage economic growth, then eliminating stamp duty – the tax most harmful to the economy – would be a New Year gift for everybody.
Catherine Carter is the outgoing ACT executive director of the Property Council of Australia. This is her final column and “CityNews” thanks her for her contribution over many years.