We called for federal incentives to allow states and territories to phase out stamp duty.
Federal funding would provide much needed research into the feasibility of each state and territory shifting away from stamp duty in favour of a broad-based land tax. This would allow for independent analysis to determine the best way to improve what is known as one of the state’s most inefficient taxes.
The independent study would analyse the long and short term economic impacts of the changes to property taxes.
REIWA firmly believes that the single biggest hurdle for prospective home owners in Western Australia entering the property market is the financial barrier of stamp duty.
A broad-based land tax would see the upfront payment abolished and replaced with yearly payments that would be calculated and paid in a similar way to how property owners currently pay their rates.
Spreading the cost of property taxes across many years will make home ownership a reality for more West Australians, while creating a steady stream of income for state and territory governments.
Phasing in these changes would ensure no property owners pay twice.
If a family saves $50,000 for a home deposit, which is no easy feat, and is looking to buy a home at the current median house price of $512,000, $18,783 of that deposit will go towards stamp duty. If you also factor in the Lenders Mortgage Insurance (LMI) cost of $16,010, that hard-working couple has now lost almost all of their deposit requiring them to take out a mortgage worth almost 95 per cent of the property value.
While the Federal Government cannot remove exorbitant LMI charges, it has a duty to review taxation policies that are creating a barrier to home ownership across WA and the country.
REIWA is disappointed that the abolishment of stamp duty does not appear to be on the agenda of the Morrison Government and that no political party committed to helping the states and territories phase out stamp duty if elected.
In the lead up to the election, REIWA attended an event hosted by the Liberal National Party, where we were given the opportunity to quiz Prime Minister Scott Morrison on his party’s plans to help the WA property market if re-elected.
Prime Minister Morrison’s indicated that removing stamp duty was a state-level issue. He argued that his government had already given WA a greater share of Australia’s GST revenue and these additional funds should be used to look into how to abolish stamp duty and reinvigorate the WA property market.
Regardless of whether the responsibility for this change comes at a state or federal level, we need action now. REIWA will continue to call on all levels of government to make abolishing stamp duty, in favour of a broad-based land tax, a priority.
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