Urban Taskforce Chief Executive, Tom Forrest, today congratulated NSW Premier Gladys Berejiklian and Treasurer Dominic Perrottet for taking the lead by extending the exemption of stamp duty for first home buyers which will now apply to new homes worth up to 800,000. Stamp duty relief will also apply, on a scaled basis, to newly built homes valued between $800,000 and $1 million as well as to vacant land worth up to $400,000.
“Today the Commonwealth Treasurer called for Dominic Perrottet to put his cards on the table. Unbeknown to Josh Frydenberg, the NSW Government had already taken the decision to slash stamp duty on newly built homes worth up to $800,000. This will make a big difference to the struggling property market and to new buyers”, Mr Forrest said.
“The problem with stamp duty and payroll tax is they are distortionary. The have the effect of creating a bias in the property market which slows down property transactions and payroll tax is simply a tax on employment – it is nuts.
“Today’s announcement to increase the stamp Duty threshold from $650,000 to $800,000 is recognition by Treasurer Perrottet that housing prices are higher is Sydney than in the rest of the nation. The Urban Taskforce calls on the Commonwealth to apply these new thresholds to the HomeBuilder package and make it relevant to the biggest market in the nation – that of Greater Sydney”, Mr Forrest said.
Mr Forrest said the new National Cabinet approach to decision making has worked well to date in dealing with COVID-19, but the same approach needs to be adopted in relation to the vexed issue of tax reform.
The NSW Government has been at the forefront of calling for taxation reform. The Thodey Report (2020) into NSW-Federal Financial Relations called for the abolition of Stamp Duty and Payroll tax. At a Commonwealth level, the Henry Report (2009) made the same recommendation and has been gathering dust for a decade.
The Urban Taskforce has publicly called for the abolition of stamp duty and its replacement with a broadly based land tax or an extension of the application of the GST. The GST was supposed to apply to all goods and services, thus creating enough revenue to fully compensate the unemployed, the poor and those on social security benefits as well as enabling the states to get rid of high inefficient taxes like Stamp Duty and payroll tax.
The Urban Taskforce said that changes to the Tax system could stimulate the economy and help drive Australia our of recession. Now is the time for the States and Commonwealth to come together and support:
• Progressive phase out of Stamp Duty to be replaced with a broad-based land tax or widening of the GST
• Abolition of Payroll Tax
• Removal of the additional stamp duty and land tax currently applied to all foreign investors
• Broaden and extend the application of HomeBuilder to make it relevant to NSW homes and apartments.
Urban Taskforce published last week a comprehensive report on the tax system and its impact on development. See the link to URBAN IDEAS here.