The REIQ Calls for Stamp Duty Reform and Eventual Abolishment
Considered the most economically inefficient and volatile tax imposed by State Governments, stamp duty is also the most significant barrier to home ownership, discouraging housing turnover and restricting mobility.
It’s estimated that as many as 340,000 property transactions are foregone annually due to the existence of stamp duty and accounts for approximately 45 per cent of the total cost of moving property. With real estate vital to Queensland’s prosperity, the abolition of stamp duty would generate increased economic activity and maximise housing choice and access. Furthermore, ABS data shows the number of new businesses entering the Queensland economy has declined. With COVID-19 impacting thousands of businesses, the removal of stamp duty to business sales would help to remove financial barriers and encourage business sales.
Queensland needs a program to modernise our taxation system, with stamp duty the centrepiece of this reform. We propose a 10-year program to transition to stamp duty abolishment with two key phases:
- Phase 1: Introduce stamp duty exemptions for Queenslanders aged over 65 years and all business sales.Forecasts predict approximately 380,000 additional homes will be required in Queensland over the next 10 years. Analysis commissioned by the Treasury Department found that with the right incentives in place, as many as 50,000 properties currently occupied by senior Australians could be freed up for younger buyers. The removal of this costly tax would provide the State’s seniors with more incentive to move into more appropriate housing thereby freeing up housing for up-sizing families.
- Phase 2: Replace stamp duty with a broad-based land tax as in the ACT. Analysis performed by the Treasury found stamp duty to be the tax with the highest long-term costs for living standards, while land tax had the lowest economic cost. Research from the Grattan Institute estimates that replacing stamp duty with a broad-based land tax would add as much as $9 billion annually to GDP across all the states. This reform would also ensure no tax burdens fall disproportionately onto certain groups and provide a more stable form of revenue. Transitional arrangements would need to be applied to existing landowners who have already paid stamp duty.
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