Do We Really Need Stamp Duty?
If you’ve ever bought real estate, the chances are you will have paid stamp duty.
It’s a tax imposed by the government on certain types of transaction – and property is one of them.
The issue has had policymakers divided for some time now, with some believing it to be critical to the overall stability of the economy, while others think of it as a burden on homebuyers. The amount of stamp duty owed depends on a number of factors, ranging from the price of your property to where you’re buying.
The extent of the stamp duty burden
Figures from the Australian Bureau of Statistics show that in 2012-13, taxes on property increased 8 per cent compared to the previous year. This was mainly because stamp duty increased, with real estate in Sydney and other parts of New South Wales facing the biggest burden.
Meanwhile, Property Council of Australia data shows the typical homeowner in Sydney pays around $35,000 in stamp duty. For buyers of real estate in Melbourne, the stamp duty bill stands at around $32,000 per property.
A real estate agent will be able to advise you on stamp duty in your chosen area, as well as any steps you could take to reduce the amount you pay.
Swapping stamp duty for land tax
One idea that has been put forward is replacing stamp duty in favour of a land tax. The Australian Council of Social Service (ACOSS) is among those who’ve suggested this could be a solution, indicating that it could bring advantages to the whole economy.
ACOSS believes the government should be willing to provide some money to assist with transition arrangements. This would make the land tax more feasible and give state and territory governments the support they need to implement the change.
“We recognise that low-income earners and those who are asset-rich and income-poor, such as farmers and retirees, would be impacted and might need to be compensated,” said ACOSS CEO Cassandra Goldie.
“For instance, owner-occupiers who had recently paid large stamp duties could be given credits to make the system fair in the interim.”
The Property Council of Australia agreed with this assessment, suggesting that scrapping stamp duty could bring a major boost to productivity across the entire country. However, it argued that any changes need to be well thought out to make sure they deliver benefits to the right peop