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.’