Axis Stamp Duty for $17 Billion Economic Boost: Report

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Removing state-based stamp duty for a broad-based property tax could pump $17 billion back into the Australian economy each year, according to an independent think tank.

Housing affordability is firmly on the agenda ahead of the federal election and the Grattan The Institute said a bold policy shake-up was needed to unlock supply from Australia.

The think tank called for universal planning law reforms and the abolition of stamp duty in favor of property tax at all levels to boost housing supply and tackle the crisis housing affordability, with Sydney and Melbourne ranking in the top 10 least affordable cities in the world.

lead author of the Orange Book report and Grattan Institute Chief executive Danielle Wood said the report provided policy recommendations for the party that forms government.

“It’s an ambitious program,” Wood said.

“But decades of political gridlock mean there are plenty of opportunities to improve Australians’ living standards through better politics.

“Whoever wins the 2022 federal election must get the ball rolling, so that Australia can emerge from the pandemic as a fairer, more prosperous and more optimistic nation.”

House Price Growth: 2001-2021

▲ The graph from the Orange report shows how far house prices have outpaced rent and wage growth over the past 20 years. Picture: The Grattan Institute

The report says the “biggest price of tax reform” would replace state stamp duties with general property taxes, similar to reforms already underway in New South Wales.

“Stamp duties are inefficient taxes: they discourage people from changing jobs…the economic burden of stamp duties has increased over the past two decades,” the report says.

“Moving from stamp duty to a broad-based property tax ($5 to $7 for every $1,000 of unimproved property value) could improve the situation for Australians by up to $17 billion a year. , while making housing more affordable.

“Proposals to switch from stamp duty to property tax have stalled because the politics are tough. While such a change is the responsibility of the state government, the federal government should commit to filling some of the revenue hole that would arise if a state exchanged stamp duties for property taxes, including any reduction of a State’s share in the GST.”

The report also called on the federal government to motivate reform of land use planning rules.

“Land-use planning policies are arguably governments’ greatest policy lever for stimulating economic growth, and reforms would also improve housing affordability,” the report said.

Australian land use planning rules are very prescriptive and complex. Current rules and community opposition make it very difficult to create additional residences in the inner and middle suburbs of our capital cities.

Australia has 400 housing units per 1,000 people, one of the lowest rates in the developed world, and nationally Australia has seen the second largest decline in housing stock relative to adult population in the over the past 20 years.

▲ In 1991, it took first-time home buyers six years to save the 20% down payment on an average home. Today, it takes almost double that time.

Semi-detached houses, townhouses, units and flats made up 44% of Sydney’s housing stock and 33% of Melbourne’s housing stock in 2016, up from around 38% and 28% respectively in 2006. But that still remains well below the 59% and 52% respectively that residents say they want.

The report also called for an increase of at least 40% in Commonwealth rent assistance and the construction of more social housing to ‘relieve the pressure’ on vulnerable Australians, but more needed to be done to encourage governments states to increase the supply of housing.

the Grattan The Institute said the federal government should encourage states to change planning laws and encourage “higher-density housing in inner-city areas and established suburbs.”

“Australian housing has become increasingly expensive over the past few decades, and public concern about housing affordability is growing,” the report said.

“House prices have risen much faster than incomes, making home ownership much more difficult for those without Mum and Dad’s Bank. Low-income Australians are also spending greater part of their income in rent than in the past.

According to Grattan Institute report.

Between 1981 and 2016, the homeownership rate among 25-34 year olds fell from over 60% to 45%.

For 35-44 year olds, home ownership has fallen rapidly – ​​from 74% in 1991 to around 62% today – and home ownership is also falling for 45-54 year olds.

In the early 1990s, it took six years to save a 20% down payment for a typical home for an average household. It now takes almost 12 years.

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