The Real Estate Institute of New South Wales (REINSW) has lauded the recent announcement by Prime Minister Tony Abbott confirming a review of state taxes.
The REINSW has pushed for a tax debate for several months, with the expectation that a review should lead to an evaluation of the onerous taxes on property.
“We have long called for a review of state taxes,” says REINSW deputy president John Cunningham. “Now is the time review the GST. But state tax system is inhibiting our economic growth and must be overhauled.”
The Institute believes an increase in the Goods and Services Tax (GST) would be supported by the property industry if there was an abolition of “stamp duty, land tax and other narrow based, inefficient and inequitable state taxes”.
REINSW also refers to payroll tax as an inhibitor to employment and “should be abolished”.
“The Independent Pricing and Regulatory Tribunal (IPART) has described them [land tax and stamp duty] as inefficient, and REINSW believes it should be abolished in a modern tax system,” says Mr Cunningham.
“If there is such a thing as a good tax system, it is broad based so as to provide government with its revenue but not impede or deter investment."
The Property Council of Australia (PCA) is also calling for tax reform in NSW, noting that increased stamp duty receipts were a central feature of the final results for the 2013-14 State Budget.
"The government has consistently recognised the crucial role of property in the state’s economy, particularly the housing construction market," says PCA NSW Executive Director Glenn Byres. “The property industry generates one in 10 jobs in NSW, pays over $16 billion in wages to workers and contributes over one-third of the State’s tax revenue.”
Mr Byres warns that although there is optimism and growth in the current property market, the industry needs to be wary of the continued dependence on stamp duty.
“As market conditions rise and fall, so do stamp duty receipts – and budgets are deeply vulnerable to cyclical changes. Abolition of stamp duty needs to be front-and-centre in any assessment of tax reform options as it is volatile, inefficient and crimps productivity,” Mr Byres says.
“We hope a mature debate around tax reform emerges in coming months – and that includes placing the GST on the table.”