REIWA calls for ‘overdue’ property tax reform
THE Real Estate Institute of WA wants the next State Government to commit to reforming property taxes.
Its wish list includes no increases to State property taxes, abolition of land tax aggregation rules, transfer duty concession for off-the-plan transactions and transfer duty exemptions for seniors ‘right sizing’ into more suitable dwellings.
REIWA president Hayden Groves said reforms were overdue, with the property market changing significantly over the years, and would benefit both the market and the government.
“The State Government is heavily reliant on property taxes; 33 per cent of their revenue receipts come from property taxes, and of that 50 per cent is transfer duty, so half of a third of their income is tied to the volatility of the market,” he said.
“A fall in transactional activity puts pressure on the government and in the past 10 years, sales volumes have fallen 52 per cent from 71,663 at the end of November 2006 to 34,138 in the 12 months to the end of November 2016.
“Transactions have halved and their revenue from stamp duty has about halved.”
Mr Groves said increasing stamp duty was not a viable option as it would affect affordability and discourage people from moving.
“In the absence of genuine long-term tax reform, we want the government and the Opposition and every other political party to commit to reviewing their State taxes and finding more sustainable ways in which to generate income at a state level,” he said.
Mr Groves said REIWA’s wish list was designed to be realistic, achievable and easy to implement. It hoped to get support for all four, but concessions for seniors ‘right sizing’ and off-the-plan apartment purchases were its preferred options.
“They would have an immediate and positive impact on the market, and not only the property market,” Mr Groves said.
“One of the blockages associated with transactional activity is transfer duty. When you remove transaction costs you make housing more affordable; let’s create activity in a way that makes it affordable for people to enter the market or continue to invest in the market.
“But I’m not just talking about (more) transactional activity, I’m talking about planning policy dovetailing into Directions 2031, housing affordability, releasing aspirational stock out there into the market, stimulating transfer activity; it would cover a lot of bases.”
Despite numerous announcements since the election period formally began last week, neither Liberal nor Labor have offered an outcome to industry.
Treasurer Mike Nahan said WA would need to significantly increase its current land tax rate to abolish transfer duty, which was not practical.
Opposition spokesman Ben Wyatt said WA Labor had no plans to increase stamp duty but also did not plan to make any significant cuts in stamp duty revenue.
Over the next few weeks, REIWA will be launching its policies in detail on reiwa.com and asking for public feedback.