Scott's Weekly Column

The scourge of Stamp Duty

We often read in the papers or see TV reports about housing affordability with governments trying to solve it by limiting overseas investors, forcing developers to create “low cost” housing solutions etc, etc.

As the HIA`s senior economist Shane Garrett recently commented, state governments need to look a lot closer to home for part of the solution; -

Mr Garrett said that in NSW, stamp duty rates have not been reformed since 1985 when the average house price was $70,000.

 “State governments are compounding the housing affordability crisis,” the senior economist said. 

“Total stamp duty revenues almost doubled over the four years, from $11.7 billion in 2011-12 to $20.6 billion in 2015-16, most of which is likely to have come from residential building.”

Mr Garrett added that this might have led to some dependability issues for the State governments.

“State governments are now more reliant on stamp duty revenues than at any time for a decade. This trend will continue unless state governments recalibrate their taxes on housing.”

He also said that this stamp duty burden is increasing under every metric — nominal dollars, real dollars — as a proportion of dwelling prices and as a share of total state revenue.

“Without reform, this trend will continue,” Mr Garrett said.

“By draining the pockets of home buyers to the tune of over $20 billion each year, stamp duty is a central pillar of the affordability crisis. A long plan to do away with the scourge of stamp duty would be a huge victory for housing affordability in this country.”

When you think that stamp duty was supposed to be abolished when GST was introduced in 2000 it only makes you wonder where house process would be today with the compounding effect of stamp duty?

Have a great weekend!