State taxes: it’s time to tidy up unfinished business
23 March 2004
With
Commonwealth-State tax arrangements on the agenda again at this
Friday’s meeting of Commonwealth and State/Territory Treasurers,
it’s time to tidy up unfinished business, according to Real Estate Institute of
Australia (REIA) President Kareena
Ballard.
‘We commend the Commonwealth and State/Territory Governments on
tax reform to date. The removal of stamp duty on commercial
property transactions, as contained in the Inter Government
Agreement (IGA) on GST, will be a good step forward. But there
is still work to be done in the tax reform process. Stamp duty
on residential property transactions should be on the agenda for
Friday’s meeting in keeping with the spirit of the IGA,’ says
Mrs Ballard.
In an REIA-commissioned report, Access Economics concluded that
property taxes are inefficient and inequitable. As a tax base
for the States they have returned large windfalls in a time of
property price increases at the expense of home owners,
contributing significantly to the decline in housing
affordability and home ownership. As growth in the property
market slows, the States and Territories will be forced to fill
the revenue gap elsewhere – surely not an efficient budget
mechanism.
‘The REIA calls on the Treasurers to continue the good work
which has been started on tax reform and to address the issue of
residential stamp duty. The Queensland government recently
announced the abolition of stamp duty for first home buyers on
property worth up to $250,000, and will extend stamp duty
rebates to properties worth up to $500,000 from May 1. The
Northern Territory government also made substantial stamp duty
concessions for first home buyers in 2002. We challenge all
state governments to phase out property taxes as GST revenue to
the states increases. Most states are now GST-positive,’ says
Mrs Ballard.
‘The state property tax bonanza must end before further damage
is done. Declining housing affordability and home ownership,
particularly in the context of self-funded retirement, is a real
concern for Australians. We need a commitment to reduce, if not
abolish, inefficient state property taxes.’
