Time to shake off stamp duty

The Courier-Mail - Property - - Marketoutlook - - REIQ chair Pamela Bennett

OVER the past week there has been talk in the me­dia about the fea­si­bil­ity of re­mov­ing stamp duty on the sale of res­i­den­tial prop­er­ties in Queens­land.

What is most sur­pris­ing about this dis­cus­sion is that it ap­pears to be the Queens­land Gov­ern­ment it­self that has started the con­ver­sa­tion.

Trea­surer Andrew Fraser has called stamp duty a relic and asked how the tax sys­tem can bet­ter serve its pop­u­la­tion.

While the Henry Tax Re­view, of which very few of its rec­om­men­da­tions have seen the light of day, also high­lighted stamp duty as a tax that needed to be mod­ernised.

The REIQ has been call­ing for stamp duty to be abol­ished for many years, es­pe­cially in the pe­riod that has passed since the in­tro­duc­tion of the GST.

From 2000, monies al­lo­cated to the State Gov­ern­ment through the GST were sup­posed to re­place the need for stamp duty on res­i­den­tial prop­erty but that never hap­pened and stamp duty has re­mained as bur­den­some as ever.

While Queens­land en­joys the low­est stamp duty on res­i­den­tial prop­erty in the coun­try – and the State Gov­ern­ment should be duly recog­nised for keep­ing it thus – and first home buy­ers can ac­cess stamp duty con­ces­sions, there is no doubt this tax on prop­erty own­ers and in­vestors should be abol­ished.

How­ever, it is likely that a form of stamp duty will re­main, such as an in­crease in land taxes, so not ev­ery­one will ben­e­fit from its scrap­ping.

That said, there has never been a bet­ter time for stamp duty to be abol­ished, given the ma­jor­ity of Queens­land’s res­i­den­tial prop­erty mar­ket re­mains sub­dued.

REIQ mem­bers re­port 2010 was a par­tic­u­larly tough year as many buy­ers opted to stay on the side­lines in the face of in­creas­ing in­ter­est rates and an econ­omy that was still patchy at best.

In­deed, the Re­serve Bank’s cash rate in­crease in Novem­ber, cou­pled with the dou­ble-dip­ping from len­ders, re­ally put the brakes on a mar­ket that at the time was on a ten­ta­tive up­swing.

The nat­u­ral dis­as­ters in the last three months have just com­pounded the sit­u­a­tion with con­fi­dence lev­els and buyer num­bers low.

The REIQ still main­tains that the fun­da­men­tals in play at the end of last year for Queens­land, such as bil­lions of dol­lars of min­ing in­vest­ment, the po­ten­tial for jobs growth, and fur­ther in­fra­struc­ture de­vel­op­ment, still re­main.

The re­cov­ery and re­build­ing phase we are mov­ing into will add some much­needed stim­u­lus into our econ­omy.

But what is needed to im­prove the prop­erty mar­ket, and with it the broader econ­omy, is the will to do some­thing dif­fer­ent by trans­form­ing a tax sys­tem that no longer suits its pop­u­la­tion.

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