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Time to exorcise the evil of stamp duty

Jessica Irvine

by Jessica Irvine

12 Nov 05:45am

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Filed under: Economy, Housing, Stamp Duty, Tax, Taxes

67 comments

What if I told you there was a way to make housing more affordable, cut congestion on our roads, lower unemployment, boost productivity and stimulate economic activity?


Would you do it?

‘No’, is the answer if you are federal assistant Treasurer David Bradbury.Mr Bradbury thinks a proposal by state treasurers to abolish their stamp duties on property sales in return for a bigger slice of federal government revenue is ridiculous and ham-fisted.

First, this is particularly unfair given it was the Treasurer, Wayne Swan, who gave the state treasurers the task of investigating options for reform of inefficient state taxes such as stamp duty.

Secondly, on a scale of one to evil, stamp duty is the green vomit-spraying, head-spinner of the tax toolbox.

The Ken Henry review recommended the complete abolition of stamp duties.

This should be funded, he said, by an extension of broad-based consumption taxes (that’s the GST to you and me, although the review was expressly forbidden from mentioning the GST) or by extending land tax to residential properties.

Land tax is an efficient tax because land is immovable - it can’t up and leave.

And land is pretty hard to hide, so tax avoidance is less of an issue.

Stamp duty, by contrast, is a tax on transactions.

And guess what? When you tax a transaction, people do not want to do it as much.

As an aside, have you ever wondered why it’s called stamp duty? In colonial days, a physical stamp had to be attached, or impressed, to all contracts before they became legally binding. A fee was charged every time and such stamp duties were a major source of revenue for the early colonies, applying to a host of transactions including wages, cheques and sales of beer, cattle and pigs.

Most of these duties have been removed, but stamp duty on property sales is one of the handful remaining.

Stamp duty on property is particularly inefficient because it means fewer houses are transacted than would otherwise be the case.

This means people stay in homes that do not meet their needs, at a cost to their happiness and also to broader society for a number of reasons.

By keeping people in homes to which they are unsuited, stamp duties lead to an inefficient use of the housing stock, pushing up prices. Our needs for housing change over our lifetimes.

We are, if we are lucky, born into a family home.

In our 20s, we move out into apartments. At some point, we start a family, requiring a bigger home.

When the kids move out, we downsize to smaller, easier-to-maintain properties. People also move house to be closer to a job or when relationships break down.

But when stamp duty is charged, some older people do not downsize.

Given the lack of supply of new homes, young couples are increasingly forced to raise children in apartments or cramped living conditions.

Stamp duty also hurts affordability for young people because it means more people choose to renovate their existing home, rather than move to a bigger one.

This ups the size of all homes, in turn making them less affordable, not to mention expanding their footprint on the environment.

Stamp duty also leads to higher unemployment by discouraging unemployed people from moving to a job in a different city.

It may also stop employed people from moving to a better-paying job.

If people do change jobs, but stay in homes far away from their new work, they face longer commutes, creating greater road congestion.

As anyone who has ever been stuck in traffic knows, congestion imposes a cost on all commuters and the economy through lost production.

Stamp duty is a huge upfront cost for first home buyers right at the time when their budgets are most stretched.

And it is an unfair tax because it taxes people not according to their ability to pay, but depending on how often they move.

About half of all homeowners have occupied their home for nine years or less. About 18 per cent bought within the past three years and 26 per cent have been in their home for more than 20 years.

People who get divorced, have children or are in insecure work are more likely to need to move.

For older Australians, staying in large homes can leave them property rich, but cash poor.

Without unlocking the equity in their homes, they may need more government support than if they downsized.

The case for abolishing stamp duty is compelling.

It’s just a question of how.

Stamp duty makes up about a fifth of state government revenue and abolishing it would blow a $13 billion hole in state budgets.

It is completely irresponsible for the Federal Government to dismiss so out of hand the attempts by state Treasurers to remodel their inefficient taxes.

The Federal Government controls the levers of our most powerful and efficient taxes, such as personal income tax, company tax and the GST.

A proper tax debate would keep all these options on the table for funding the abolition of stamp duties, given their perverse effect on housing affordability, traffic and jobs.

Comments on this post will close at 8pm AEDST.

Most commented

67 comments

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    • Zed says:

      05:04am | 12/11/12

      But this will TRIPLE YOUR RATES*

      *by 2032
      *rates may not actually triple

      Reply

    • Bertrand says:

      05:05am | 12/11/12

      Isn’t the GST a tax on a transaction?

      Just sayin’.

      Reply

    • Anubis says:

      07:57am | 12/11/12

      As part of the original GST negotiations the states were supposed to phase out Stamp Duty and other state taxes in return for the GST revenue. However, as all the State Governments at the time were Labor and the GST was a liberal initiative, the Labor State Governments did what Labor do so well and reneged on their agreement. Subsequent Liberal state governments have been no better, however, as they continued with the GST revenue AND Stamp Duty when it was well within their powers to remove this unnecessary tax. But as with all Governments once they get a revenue stream they will fight tooth and nail to keep it - bugger the taxpayer who has to fund it.

    • Tator says:

      08:13am | 12/11/12

      Anubis,
      the agreement was for stamp duty on share transfers only, not for stamp duties on property or motor vehicles.

    • Achmed says:

      08:24am | 12/11/12

      All states were Labor…not true.  WA had Liberal Govt lead by Richard Court.
      The current Premier was in the Cabinet that signed off on the GST Agreement and in typical Liberal hypocrisy he now blames the Federal Labor for that which was put in place by the Howard Liberals and agreed to by the Court Liberal Govt

    • Tubesteak says:

      08:32am | 12/11/12

      Anubis
      Another critical issue was the level of funding state governments got from the GST. NSW was short-changed especially for the land area it is meant to cover and the population it is meant to cover. It’s easier in Victoria because it has less land area to build roads for and almost the same population.

      State governments have to pay for just about all the critical things: infrastructure, roads and hospitals. NSW with a largish land area and large population has to fund a lot of projects. Therefore, keeping stamp duty seems like a good thing.

      But yes, state governments were meant to abolish it with the GST.

      Another thing that would ease house prices is a better public transport system. Very fast trains from Newcastle and Wollongong that could get to the Sydney CBD in less than 40 minutes would mean people could live there and commute.

      Same with fast trains in Penrith and Campbelltown.

      We wouldn’t all be forced to live within 10km of the CBD (Hurstville, Strathfield and Chatswood) and still face 40+ minute commute times (door to desk) from these areas. This drives up demand for housing making housing more expensive.

      We could spread outselves out more. Saving $50,000 or so grand stamp duty on a house would pale into insignificance if you could live in Penright, face only a 1 hour round trip to and from work and still only have to pay $300k for a 5br house.

    • zsrenn says:

      11:09am | 12/11/12

      @ Achmed Nice semantics!

      The GST was introduced in July and Labor were voted in in February. Yeh The incumbent government had a full 7 months to make the appropriate evaluations and changes plus hold an election.

      Talk about telling half truths. As I said semantics!

    • Dissident says:

      11:26am | 12/11/12

      Hey Tubesteak, I hear you loud and clear on that one. WA is the biggest State by a long shot and gets the least GST.

      NSW and Victoria get in excess of 90c in the dollar.

      WA, on the other hand, is getting 55c in the dollar. You reckon we’re happy about that when the Federal Government then comes along and tells us that they want to take our mining revenue too?

      For all you people who talk about ‘spreading the mining boom’ - we already do, through GST distributions. Even though the Constitution says that the States own the minerals. Aren’t West Australians nice people to give the other States the benefit of our boom which we are exclusively entitled to?

      As far as Duty goes, the existing system as it stands in WA is pretty good. If you are buying an established home worth up to 500k, and you are entitled to receive the First Home Owners Grant, you pay no Duty. It would actually be worse in WA if you got rid of Duty on property transactions and tacked it back as Land Tax, because first homeowners didn’t pay the Duty in the first instance.

      Oh, also do a google search for ‘premium property tax’ to see the kind of backlash you will get if Land Tax were put on people’s family homes.

    • TimB says:

      05:27am | 12/11/12

      ‘Would you do it?

      ‘No’, is the answer if you are federal assistant Treasurer David Bradbury.’


      Or if you’re Shane from Melbourne and view the removal of Stamp Duty as somehow subsidising peoples ‘lifestyle choices’ to move property.

      Ignore the fact that Stamp Duty is a pointless and useless tax or that it was supposed to be abolished by the states when the GST came in. That’s irrelevant.

      Reply

    • Shane From Melbourne says:

      09:58am | 12/11/12

      Damn straight. If you want to move to another location, you can pay for the privilege. In fact stamp duty in Victoria should be doubled to discourage people from moving here…...

    • TimB says:

      10:18am | 12/11/12

      “Damn straight. If you want to move to another location, you can pay for the privilege.”

      People do pay for the privilege. It’s called the purchase price of the property.
      So exactly why do you think they should pay more to the government on top of that? What is your rationale for paying Stamp Duty beyond the fact that it exists?

      Your entire position is built on fairy floss.

    • Shane From Melbourne says:

      10:29am | 12/11/12

      @TimB- Since in theory all land is retained by the Crown, it is only right that you pay a premium to the Crown to move to that location. The purchase price is for the property rights and any improvements is paid to the current owner.

    • TimB says:

      10:46am | 12/11/12

      “@TimB- Since in theory all land is retained by the Crown, it is only right that you pay a premium to the Crown to move to that location. “

      It’s called land tax Shane. You already pay a premium just for holding onto that location. Why the heck is it ‘only right’ that you pay a premium for moving to a location? Wheels within wheels within wheels. Silly reasoning.

      The Crown incurs no cost when people move. Indeed by your logic, if you have to pay the crown when you move TO a location, surely they should be paying you when you move FROM a location. Right?

      And perhaps you should have paid more attention to the article:

      “As an aside, have you ever wondered why it’s called stamp duty? In colonial days, a physical stamp had to be attached, or impressed, to all contracts before they became legally binding. A fee was charged every time “

      Stamp duty is about recovering the costs of keeping the records up to date, making sure all the transactions are recorded and are nice and legal. That’s all. Something already covered sorted by conveyancers when sales take place I believe. And the costs don’t run into the thousands of dollars collected by stamp duty.

      There is no reason for this tax to exist.

    • AdamC says:

      12:44pm | 12/11/12

      Another truly bizarre contribution to a debate from Shane from Melbourne. Shane, one could almost start to suspect you are a misanthrope, what with your apparent aversion to human beings.

      Taxing transactions that are not value-adding economic activity is stupid. The author is right in that respect. (This is the same reason that a tax on financial transactions is a terrible idea.) Some people above seem to mistake a tax on added value or consumption (the GST) with a tax on mere transactions. That is not an accurate characterisation.

      I do not really rate the states’ proposals. However, I do support the idea of allowing the states to levy a state income tax (to be collected by the ATO) set at a rate determined by each state. That would create some welcome tax competition among states in Australia.

      Better yet would be Jessica Irvine’s proposal for a broad-based land tax. To avoid the problem of forcing home-rich, cash-poor people (like retirees) from being forced to sell their homed to pay the tax, you could enable to tax to accumulate, HECS-like, then recover it from the person’s deceased estate by selling the property.

      That is far too sensible to ever be implemented in Australia, of course.

    • Shane From Melbourne says:

      06:02pm | 12/11/12

      @AdamC- Flattery will get you nowhere.

    • GROBP says:

      06:38am | 12/11/12

      All true.

      What if I told you every problem is also because of a growing population? Far more problems in fact. So let’s do both.

      Reply

    • PJ says:

      08:13am | 12/11/12

      Yes, if the Labor Party would drop their pursuit of the Big Australia the housing issues and traffic issues would disappear.

      Last time I read about issues on creating the Big Australia, we had 1300 people arriving weekly into all our major cities. The Age reported that last year we had 341,000 arrive and 222,000 were just sitting there, neither employed or unemployed.

      Lower house prices and Home demand, remove congestion from our roads through controlled immigration. Easy.

      We do not have the economy to support 40 million people.

    • GROBP says:

      09:30am | 12/11/12

      Absolutely PJ. We certainly don’t have the economy after having sold so many producing assets including the most ridiculous of them all; farm land.

      Here’s Gillards bigger lie than the carbon tax.

      http://www.youtube.com/watch?v=pyR2pu_pY_I

    • Keep it real says:

      10:08am | 12/11/12

      babble-on
      I see you’re still making stuff up.
      You are supposed to go large.
      With immigration Preliminary Net Overseas Migration (NOM} in 2010-11 estimated at 170,300 persons, which was 13% (25,800 persons) less than in 2009-10., I doubt immigration was 341,000.
      But you have been told to go large on many occasions for maximum effect. Based on your past use of numbers, You should have gone for 3.4 million with 2 million “sitting” around and just as is your wont, I would have left out the bit where 99% of those 2 million “sitting around” were retired poms escaping what England has become just like you.

    • GROBP says:

      10:28am | 12/11/12

      @Keep it real

      I read somewhere credible it was about 300k. What does it matter if it is 300, 341 or 100? Over the years it adds up to a bloody lot of people. Stick to the issue, not semantics.

      What’s your view on the issue, not whether it’s 300 or 341k, Keep it real?

    • GROBP says:

      10:32am | 12/11/12

      Hang on Keep it real. Who’s babble-on? It was PJ that made those comments. Feels like an Abbot and Costello skit. Anyway answer my question please.

    • Michael S says:

      11:07am | 12/11/12

      It’s possible that both sets of numbers are correct. GROBP used gross numbers, Keep It Real used net.
      It’s definately believable that 341,000 immigrated - and if 170,000 emigrated, then that would mean a net gain of 171,000. That would mean that twice as many people are arriving as are leaving.

      But the original issue raised by GROPB is that any increase in population means that, (assuming that the growth in the number of people aspiring to have a roof over their head is greater than the increase in the number of people who will accept being homeless and sleeping rough on the street), demand for the finite number of dwellings available is increased; and therefore the price is higher and affordability is therefore lower.

    • GROBP says:

      11:21am | 12/11/12

      Population growth = increased HOUSING COST

      Population growth = increased power bills

      Population growth = increased food bills

      Population growth = increased water bills

      Population growth = increased congestion

      Population growth = increased travel costs

      Population growth = increased pollution

      Population growth = increased carbon output

      Population growth = increased environment destruction

      Population growth = lower wages

      The biggest issue we don’t talk about, it’s ridiculous.

    • Keep it real says:

      11:58am | 12/11/12

      GROPBG
      Who is babble-on?

      You answered your own question.

    • GROBP says:

      12:11pm | 12/11/12

      @Keep it real

      Yeah, cryptic, cynical and sarcasm are hard to pull off in the written word. Best you just spell it out and save the confusion, because I still don’t get what you’re talking about.

      Are you saying PJ’s name used to be babble on? I do remember a babbleon I think.

    • Super D says:

      06:39am | 12/11/12

      Removing stamp duty would see house prices rise as prices are essentially demand driven, essentially set by the marginal buyers ability to pay. As such it would create a one off windfall to homeowners from homebuyers.

      This isn’t a big issue for me and is certainly outweighed by the benefits of flexibility to buyers. As it stands to upgrade your house you need to be able to afford not just a better house but also to pay the government. This incentivized people to max themselves with their purchase making it a far riskier proposition. Indeed it encourages first homebuyers to go for McMansions they may need rather than more modest houses that suit their current needs.

      Reply

    • Borderer says:

      09:01am | 12/11/12

      My thoughts exactly, if houses are too expensive, then demand drops, cheaper it increases demand and price rises to what the market will bear, stamp duty or no.
      People who say getting rid of stamp duty will make housing more affordable flatly ignore the basic economic concept of supply and demand.
      The only way to lower house prices is to increase supply of available land to build homes on, the environmental effect being obvious. Or build affordable unit highrises (increase density).

    • Gordon says:

      09:51am | 12/11/12

      Homes are the only appeciating asset you can buy and not be taxed on the capital gain. That encourages people to absolutely max out on that one purchase,(and) to divert investment away from other things like company startups. Borderer is right that dropping sales tax will not change house prices…they’ll just go up to meet the market.  It would limit the damage in that people could move house up or down market to meet their needs more easily.  Changing the CGT tax treatment and having a critcial look at negative gearing would make more difference to affordability. Good luck getting it done politically though. Rising house values kept JWH in govt for 4 terms, don’t expect anyone to volunteer to trash them.

    • expat says:

      11:54am | 12/11/12

      Absolutely Gordon, any capital gain derived from property, regardless of whether it is an investment or for living in.

    • Dissident says:

      12:28pm | 12/11/12

      @expat and Gordon - if you are going to remove the CGT exemption on the family home, you also have to enable people to claim deductions for interest or you make an investment property a better idea than a family home. You would also likely have to get rid of the 50% discount method of calculating capital gains because otherwise you are giving people a 100% tax deduction on interest but only getting 50% back from the capital gain. Between those two points, you would smash (absolutely smash to itty-bitty pieces) government tax intake.

      Oh - and it is also horribly unfair for anyone who has paid off their home, which is about 1/3 of the population - to suddenly slug them CGT on their own home. Perhaps you would have to introduce a phase in where houses that were acquired prior to the legislation taking place retain their Primary Residence exemption, like pre September ‘85 investments are treated now.

      As far as scrapping negative gearing - that is just a bad idea full stop. You can’t in good conscience assess tax on revenue that somebody makes on (say) an investment property if you aren’t going to let them claim deductions on losses. People don’t enter negative gearing situations to perpetually make losses (that would just be stupid), rather they decide to take a hit to their income for a few years while they establish a future income - that they will end up paying tax on anyway. It is basically a partnership in which the Government has a stake anyway. The government temporarily forgoes taxable revenue (ie, the negative gearing reduces somebodys taxes) in order to get a future tax income from the property when it is positively geared.

    • expat says:

      01:43pm | 12/11/12

      I think most of us would be over the moon if we could claim the interest on our principal place of residence.

      As Gordon mentioned, the current incentive is to put everything you have into your principal place of residence because it acts like a little tax shelter. If I mentioned the words, offshore and assets in the same sentence people jump up and down about how I’m avoiding my “responsibilities”.. Yet what percentage of Australians own property and are chasing tax free capital gains? Just putting it out there..

      Let’s see an article about how pensioners are hiding their wealth in the biggest asset they hold so that they can access the pension.. So many scream poor, yet are sitting on a large property in the inner suburbs worth millions that they will not downgrade from because they risk losing the pension!

    • FINK says:

      07:05am | 12/11/12

      This is really a non issue and not difficult at all.
      If you want abolish stamp duties, simply abolish the inefficient State Governments.
      Oh wait! We would then need to trust the Federal governments, present and future to then abolish a tax, not in this lifetime…
      As for a Land Tax on the residential palace, yeah only if you want a revolution, the governments just don’t get it, if you want to tax us more, then give us more to tax. Remove Income Tax, let us decide where your tax revenue comes from.

      Reply

    • Economist says:

      07:10am | 12/11/12

      Support the abolishment but only for the family home/ residents. Otherwise it will simply result in a free for all for investors to buy out the existing housing stock in the inner cities resulting in the same prices with the stamp duty.

      You’ll also simply get investors up rooting tenants to chase the capital gain.

      Reply

    • GROBP says:

      08:03am | 12/11/12

      Very true. Good observations.

    • Tim says:

      08:40am | 12/11/12

      Economist,
      What if like in Canberra they replaced the stamp duty revenue with higher rates or land taxes for owners?

      That would significantly increase the holding costs and make the investment less attractive no?

    • Borderer says:

      09:14am | 12/11/12

      Tim,
      How would the poor rent if people didn’t hold property for investment? How would they afford it if the cost of holding property went up?

    • Economist says:

      09:19am | 12/11/12

      Tim,

      I think the argument is that by broadening the base, with land taxes/rate / higher GST, you’re not creating as big a distortion as you are by having higher stamp duties.

      For example the GST bring is only about $50B a year spread to the states from the last time I looked at the budget papers. I think this figure would surprise a lot of Australians who think the GST brings in more revenue. So that would mean for NSW it actually brings in only at 1/5th of their revenue, so the rate would almost have to go to 20% to cover the drop in stamp duty revenues, or 15% and broadened to all goods and services as an estimate.

      With regards to rates/land tax, yes these would increase substantially if stamp duty was abolished and the GST wasn’t increased, but it would be over a larger base so I don’t believe tripling of rates would necessarily occur, but I don’t have the numbers in front of me for land tax and rates for each state.

      But you are right if people are still cash poor they wouldn’t support abolishing stamp duty with higher rates. That’s why I’m advocating that stamp duty still exists for investment properties, or alternatively no stamp duty on new properties for investors. We have to get investors out of turning over the existing housing stock, which I believe is around 90%.

    • Tim says:

      10:02am | 12/11/12

      Economist,
      thanks good points. I sort of think the same way with negative gearing in that it should only be allowed on new properties, so the benefit only comes from increasing the amount of housing stock available.

      Borderer,
      just my thoughts but if the cost of holding goes up, the price of the house will come down making it more affordable. More people would then be able to purchase rather than rent and there would be less investors driving the price up for capital gains.

    • expat says:

      12:03pm | 12/11/12

      A lease *should* be more expensive than ownership, that is how it is anywhere else in the world.

    • Borderer says:

      12:18pm | 12/11/12

      Tim,
      House prices are generally inelastic in residential situations. People are hardly ever going to sell their homes for less than they paid, particularly when they’ve borrowed to purchase. The only place property values go down are in premium residences (where location attracts a big premium) or holiday rental areas (where the property is pure investment like on the Goldcoast and the investor sells for whatever they can get to another investor).
      At best you will have residential property stagnent with the premium (price push by sellers) drop off but no big downward slides (nobody will sell with negative equity). Getting rid of stamp duty will never lower house prices in any significant manner, affordability will only occur with wages growth and stagnation in house prices. One takes time, the other needs a push factor like increased supply of housing.
      Increasing the cost of holding would only drive rents up, this would push people into buying (like the carbon tax was supposed to push green alternatives) but all it does is screw those that can least afford it and no government handout.
      The only logical solution is to push for high rise units, 3 bedroom and spacious. Make them actually attractive living alternatives for families rather than closet sized pads for hipster 20 somethings.

    • Tim says:

      12:35pm | 12/11/12

      Borderer,
      I’m not talking about a house price crash or it happening overnight, I’m talking about a more prolonged stagnation and their value being eroded by inflation. In Canberra, I think the plan is to get rid of stamp duty over a decade or two. The revenue will be replaced by increased rates.

      “Increasing the cost of holding would only drive rents up”

      I don’t think this would happen. I think the lower demand from investors due to reduced yields would lower house prices over time, allowing more people to buy and reducing pressure on the rental market.

      Although we would still need to ensure that overall housing stock increased which is why I think Economist’s idea of giving tax breaks to investors of new homes is a good one.

    • Borderer says:

      01:24pm | 12/11/12

      @Tim
      I don’t think this would happen. I think the lower demand from investors due to reduced yields would lower house prices over time, allowing more people to buy and reducing pressure on the rental market. 

      The problem being the law change would set the market in motion straight away while the time it takes to normalise would be much longer. In that period the poor would suffer enormously through having the houses they rent being put up for sale or the rents skyrocketing, all the while they are unable to afford to purchase. Long term merit, short term political bloodbath.

    • Tim says:

      02:23pm | 12/11/12

      Borderer,
      Oh I’ve got no doubt it wouldn’t fly politically.
      And we know that nothing ever happens these days if it hasn’t passed the political point scoring test. If only there was a politician with some balls and a capacity to think of long term benefits.

    • Mahhrat says:

      07:12am | 12/11/12

      I know that I would be buying another house were it not for the 10 grand or so I’d have to spend moving.  That would mean another rental property in an affordable area.

      *shrugs*  The article has a good point, perhaps.

      Reply

    • Achmed says:

      07:24am | 12/11/12

      $10,000 or so?  My last house was $650k and I paid $26,000 in stamp duty.  I live in that great state of WA

    • Mahhrat says:

      09:41am | 12/11/12

      Aye.  My next house will be at least half that cost, so I was pretty close!! smile

    • Peter says:

      12:07pm | 12/11/12

      Friends of mine did not move because when they added the cost of stamp duty, plus realtor’s fee, plus the physical costs of moving they came to a total of about $100k.  So, they renovated instead.  (Based on a $1m home in NSW.)  This is the author’s point, I think.

    • Achmed says:

      07:26am | 12/11/12

      Remove stamp duty not only on houses but also vehicles.

      Reply

    • ibast says:

      07:57am | 12/11/12

      Stamp duty hinders economic reform.  It hinders the ability for people to move to work.  It thus pushes up wages in key industries and encourages unemployment in regions of economic downturn.

      Abolishing stamp duty would make the workforce more adaptable to economic changes.

      Reply

    • Terence says:

      08:04am | 12/11/12

      Just like Robin Hood begging the Sherriff of Nottingham to give back some of the taxes he had been inposing on the people! Just not going to happen no matter how much sense it makes!!

      Reply

    • Jaypalm says:

      08:10am | 12/11/12

      At the very least stamp duty should be able to be capitalised into loans, rather than having to be paid upfront. If you have $100k saved as a deposit (for instance), you need to fork out $30k to the government before you can settle the purchase contract. That effectively means that your deposit is $70k, which will decrease your borrowing power and/or considerably increase your Lenders Mortgage Insurance (another farce). If it could be capitalised into your loan, you would keep the $100k deposit, and simply pay off the $30k over the course of the loan (admittedly you would end up paying much more than $30k once interest was factored in, but it would still be a better proposition in the long run).

      Or just scrap it altogether, as Jessica says.

      Reply

    • Cobbler says:

      09:42am | 12/11/12

      I’d get rid of negative gearing 1st.

      Getting rid of stamp duty will just make vendors pocket more money, along with agents.

      Getting rid of negative gearing will get rid of the mindset that people who had the chance to buy up a bunch of free houses up until about 2002 will have far, far, far less reason to continue to just sit on them.

      Reply

    • ibast says:

      10:01am | 12/11/12

      Negative gearing has been neutralised by the FBT already.  The result is an increase in rent prices.

    • Peter says:

      12:14pm | 12/11/12

      @Cobble, not entirely.  Removing stamp duty would mean that prices would rise a bit at first (because people could afford to bid up) but in the long term it would increase supply, thereby reducing prices.

    • Shi says:

      09:55am | 12/11/12

      We are an average earning family, two adults, two children.  We moved recently as our house was too small.  We are renovating our new house as we couldn’t afford to buy a larger house that had everything done.  It cost us approximately $20,000 to move.  Stamp Duty and real estate fees etc.  $20,000 just gone up in smoke.  To finish our renovations will cost us about $20,000.  We now have to find that money, it will take us years of careful money management to do so, and by the time our house is finally finished, our kids will probably be just about to leave home.  If we didn’t have to pay the bloody stamp duty, we would be half way there!  It was oh so hard to hand the money over at the time!  Money that we have worked hard for!  No doubt that money will be spent sponsoring a football team to Tasmania, or first class travel or limousine travel for some overpaid politician!  I could cry to think about it.

      Reply

    • TimmyJB says:

      11:30am | 12/11/12

      Children are a choice. If you cannot afford to raise them, do not reproduce.

    • Anjuli says:

      10:24am | 12/11/12

      I to am of the opinion get rid of negative gearing , surely we would see many houses up for sale therefore lowering the sale price . My friend is a small business owner is a family man with 2 babies under 18 months ,cannot buy into the property market ,has given up is renting a small 3 bed 1 bath paying $1500 month rent . Never misses a payment surely the financial institution should look at the history of would be borrowers .

      Reply

    • Stephen says:

      10:31am | 12/11/12

      My 2nd house i purchased in Australia I had to pay $68,000 in stamp duty, gotta pay those overpaid bureaucrats some how right?  Fire another 30% state employee’s and pay off the Labor debt and then we might in 20 years get to think about a low tax society again, until then its all wealth redistribution to the max to buy votes.

      Reply

    • Peter says:

      12:11pm | 12/11/12

      Agreed, Stephen, but what is worse this tax is not even good at “wealth distribution”.  It simply over-taxes people who move around a lot.  You could be just an average Joe who has to switch cities for work and you get screwed.  Or a retired couple who simply want to downsize.  It’s totally absurd.

      Reply

    • AJ in Perth says:

      02:17pm | 12/11/12

      Peter

      if you move around a lot, why buy in the first place?
      or if it isn’t part of the plan, why sell? keep your house and rent it out as an investment property, and rent in the new location?

    • Esteban says:

      12:15pm | 12/11/12

      I totally agree with all the negatives about stamp duty raised in the article however there is an issue to do with house prices that would need to be considered.

      A major determinant of house prices is borrowing capacity as calculated by financial institutions.

      Just say for instance a couple’s borrowing capacity was $450,000 and they had $150,000 in cash to contribute to the house purchase.

      Whilst we have stamp duty in place the couple might buy a house for $580,000 and pay say $20,000 in stamp duty.

      If we abolished stamp duty the couple would end up buying the same house for $600,000 but pay no stamp duty.

      This occurs because the borrowing capacity and hence money available to apply to the house purchase ultimately influences the prices of houses.

      I don’t think trying to abolish taxes in a piecemeal fashion without a corresponding cut in Government expenditue is going to work in Australia.

      The answer is a bi parttisan committment to progressively reduce tax and Government expenditure at the same time.

      In other words identify savings in government expenditure and cut taxes by the same amount. As less tax will be taken from business more money will be in the productive sector of the economy and as business expands and wealth is created the less need there is for Government expenditure and so on it goes.

      If you can get someone on the dole,no private health insurance and kids in Government school into the workforce paying private health insurance and perhaps schooling their kids in private schools the the Government does need need as much tax to for that family.

      Reply

    • expat says:

      12:34pm | 12/11/12

      Australia Governments, I think we have established they are good at something, taxing everything to oblivion…

      To tax at the rate these governments do is criminal, its plain theft from people who work hard.

      Reply

    • Robin Hood says:

      01:21pm | 12/11/12

      My thoughts entirely!

    • expat says:

      01:58pm | 12/11/12

      What also amazes me is that they have people so well conditioned, that so many people harp up at the idea of paying as little tax as possible.
      Oh that’s right, the majority of the population is now heavily reliant on other peoples money, so it is in their best interest to ensure everyone else pay’s as much as possible.

    • Robert S McCormick says:

      01:42pm | 12/11/12

      Can you remember back to 2000 when the GST was being introduced?
      Weren’t we told, and wasn’t it agreed to by the States, that practically all State & Territory Duties, Taxes covering practically everything would, as a result of the GST, be rescinded?
      What did the States do? They cancelled Stamp Duty which was applied to invoices etc. They cancelled some State-imposed fees on Banking Transactions. That was the end of it. All other State Taxes, Levies, Fees, including Stamp Duty on House & Land Sales remained firmly in place and can add 10s of 1000s of Extra Costs for those wishing to buy a Home.
      The State Governments, as politicians always do, broke those promises.
      I was in favour of the GST. I still am.
      I was, & am, in favour of the GST being applied to Everything.
      I am even in favour of it being increased from 10% to 15%
      BUT….BUT…BUT
      ALL, I repeat, ALL those other Taxes, Fees, Levies etc. must be legislated away before any GST increase comes in & to take effect on the same day as the higher GST rate becomes effective.

      Reply

    • Bananabender56 says:

      05:58pm | 12/11/12

      Our neighbors in NZ don’t have stamp duty at all, and as far as I can tell the housing market is driven by other factors. Vehicles are cheaper than Oz but I would be interested to see what abolishing stamp duty in Oz would do to the second hand car market.

      Reply
 
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