Time to shake off stamp duty
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.