STAMP DUTY REFORM: BENEFITS AND CHALLENGES

Abstract

Recently released, Stamp Duty Reform: Benefits and Challenges draw on the most recent data to assess the benefits and reform considerations when phasing out stamp duty in favour of a broad-based land tax.

Families across all states and territories, except the ACT, are paying substantially more stamp duty when they move house than they were 20 years ago which is hindering mobility and the efficient use of the housing stock, according to the research paper.

The paper also explores how replacing stamp duty with a broad-based land tax in all states and territories would help improve economic efficiency, and that a shorter phase-in period could help limit the impact of house price growth on the cost of the transition. The aim of transitioning from stamp duty to land tax is not to increase revenue per se, and the paper demonstrates that the transition can be achieved in a revenue-neutral way.

Property tax reform is gathering momentum. The NSW government recently published a progress paper providing more detail about its reform intentions including the results of its public consultation process. The next step for NSW is to assess feedback on the progress paper and provide an update later in the year. It now joins the ACT as the only two jurisdictions in Australia intent on replacing transfer (stamp) duty with land tax. Against this backdrop, it is time to take a step back and reassess the economic benefits and challenges of transfer duty reform using the most recently available data1. The report also discusses the equity distortions created by transfer duty and why they are an important consideration.