Among economists, the abolition of stamp duty has long held near-universal appeal as the biggest tax reform available to state governments.
Economists hate stamp duty because a big, one-off tax payable upon the purchase of a property can be prohibitive. It deters workers from moving to be closer to better-paying jobs, slowing economic growth, and stops families from changing homes when they no longer suit their needs.
NSW Labor has vowed to abolish stamp duty for first home buyers for properties up to $800,000 if it wins government in March.Credit:James Brickwood, Peter Rae
But many economists also dislike stamp duty simply because it’s unfair. It punishes younger households that move around more, while rewarding older residents that tend to stay put in one home for decades.
Stamp duty even acts as a de facto tax on divorce. When the family home is sold to allow assets to be split, the separating couple each need to pay stamp duty if they purchase again. It’s a big reason why more than half of divorced women who lose their home don’t buy again, even after a decade. Now both major parties in NSW politics appear to agree, with the Labor opposition this week pledging to abolish stamp duty altogether for first home buyers purchasing properties worth up to $800,000 — effectively expanding the current exemption for homes worth up to $650,000. Those purchasing a first home worth up to $1 million will also be offered a discount.
The NSW government has already legislated to offer first home buyers the option of paying an annual land tax rather than stamp duty if they buy a property worth up to $1.5 million. Buyers who opt for the land tax will pay an annual levy of $400 and a 0.3 per cent tax on the value of their land.
So does this mean that stamp duty may soon be a thing of the past, at least in NSW?
Not so fast.
While committing to phase out stamp duty for first home buyers, neither of the two major parties is promising to make it easier for existing home owners to move and avoid paying stamp duty a second time, which is the main rationale for reform in the first place. Addressing that disincentive is key to capturing what NSW Treasury estimates to be a $10-billion-a-year economic dividend from stamp duty reform in the long term.
Will stamp duty soon be a thing of the past? Not so fast
8
1
10.01.2023
Among economists, the abolition of stamp duty has long held near-universal appeal as the biggest tax reform available to state governments.
Economists hate stamp duty because a big, one-off tax payable upon the purchase of a property can be prohibitive. It deters workers from moving to be closer to better-paying jobs, slowing economic growth, and stops families from changing homes when they no longer suit their needs.
NSW Labor has vowed to abolish stamp duty for first home buyers for properties up to $800,000 if it wins government in March.Credit:James Brickwood,........
© The Sydney Morning Herald
visit website
login
who are we?
contact us
qosheapp
Toi Staff
Gideon Levy
Grant Arthur Gochin
Mort Laitner
Andrew Mitrovica
Priyamvada Gopal
Poonam Muttreja
Obaid Mir
Patrick Gathara
Zaher Sahloul
منير أديب
