Australia’s GDP would increase by $3.3 billion and real consumption by $9.7 billion annually if conveyancing stamp duty was scrapped and replaced with more efficient revenue sources, according to economic modelling by Deloitte Access Economics (DAE).
A DAE report, entitled The economic impact of stamp duty, reveals the extent to which stamp duty holds back economic growth.
It found that abolishing non-residential stamp duty was an affordable option with significant economic benefits that would also offset a higher GST.
By increasing the costs of moving, stamp duties may decrease labour mobility, overall labour supply and productivity in the economy, said the report commissioned by the Property Council of Australia.
The key issue was that stamp duty was found to discourage people from moving, which affected labour supply and productivity, increased the cost of commuting, prevented "up-sizing or down-sizing", and discouraged people from moving to be closer to friends or family. It also increased the cost to business of restructuring or relocating.
DAE’s modelling also calculated that by abolishing stamp duty, households would be better off by an additional $20 per week, while also driving an increase in investment and transaction activity.
The average turnover of housing would decrease from 13 years to 8 years, generating up to 340,000 more property transactions annually, and boosting consumption by $9.7 billion, the report found.
Property Council research released earlier this month showed that nationwide, state and territory government revenue from stamp duties on property rose from $6.4bn for the 2000-01 financial year to $16bn in 2013-14. Meanwhile, homebuyers and business have handed over a total of $163 billion in stamp duty payments on property since 2000-01.
Australia’s states and territories are collectively on track to reap a record $20 billion in conveyancing stamp duty for the current financial year alone, a threefold increase in 14 years.
The South Australian Government recently announced it would accelerate plans to abolish commercial conveyance stamp duties as part of the state budget plans, with the SA government considering it a fast-track to growth.
“Getting rid of taxes which harm the economy benefits everybody, and should be a key objective of tax reform,” said Property Council CEO Ken Morrison.
“State and territory governments are reaping record gains from the growing stamp duty impost at the expense of homebuyers, housing affordability and the economy. Stamp duty has spiralled out of control, stymying the creation of the new jobs and growth our nation needs.
“If we are to have a genuine national tax reform debate that examines ways to grow the economy, and is guided by principles of fairness, then stamp duty must be on the agenda," he said.
A Newgate survery earlier this year found more than two thirds of Australians surveyed (70%) supported the idea of abolishing stamp duty with the same number believing that the level of tax on people’s homes is too high.