Carrots for Baby Boomers

16 May 2013

MELBOURNE:- The federal budget initiative to omit conveyancing Stamp Duty for retirees down-sizing to a smaller home acknowledges just how destructive and behavior-distorting this vile tax is, says Prosper Australia.

“This is a disgusting, economically dishonest policy,” David Collyer Campaign Manager Prosper Australia said today. “Again, the baby boomer generation is being treated as a special class above everyone else by a government seeking their vote.

“Stamp Duty is a big nasty tax stick that traps people in their houses or excludes them from home ownership. It is a cruel barrier to labor mobility and a financial disaster when people have to give up their homes due to unemployment, sickness or family breakdown.”

“Stamp Duties inevitably lead to an inefficient use of our housing stock. Empty nesters occupy large homes with multiple spare bedrooms and young families are trapped in small apartments.

“If government truly wants to use housing more efficiently, it should abolish Stamp Duty altogether and fund this by abolishing the principal place of residence exemption from State Land Tax. Instead, it merely benefits one segment of society (retirees) at the expense of another (young growing families).

The change to this equitable and economically efficient tax base is easier than many observers imagine. Landowners could be credited with any Stamp Duty they have paid, offset by the hypothetical land tax they would have paid from date of purchase. Asset rich, cash poor retirees could accumulate their land tax liability, with the bill payable on death or when the house is sold, via a HECS-type scheme.

“Replacing Stamp Duty with a broad-based land tax would transform the provision of housing. People would be free to move to homes that best meet their needs.

“It would discourage land banking and land vagrancy, and prompt owners to put assets to their best and highest use. This would profoundly alter the supply of land, to the great benefit of all.

“Infrastructure would become self-funding as some of the uplift in land values from new roads and schools would return to government.

“Australia’s land price bubble has excluded an entire generation of young adults from home ownership, except on the most onerous terms. The put-upon must demand both a land price re-set AND tax reform.”

Media comment: David Collyer 0413 248 193

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through land tax and mining tax.

4 Comments

  1. THEO16-05-2013

    The priority-I would say prejudice-of institutional government for baby boomers is becoming tiresome and unacceptable. It is bordering on deliberate divisiveness between the older and younger generations, usually at the expense of the latter. It must stop and one of the best ways would be for the younger generation to continue “Prosper Australia’s” ‘DONT BUY NOW’ policy and my personal opinion of not to vote for any political candidate but instead to place a list of their complaints at the ballot box instead. Maybe this will force institutional government to listen to the younger generation

  2. Elizabeth20-05-2013

    I am wondering if, instead of being a negative step, if it is in fact a step in the right direction of removing stamp duty and upping land tax? It could be a very smart move to implement change.

    Without knowing exactly what is in the intent of the move, one can only surmise.
    So, with your indulgence, please allow the following possible scenario:

    If the intention is to bring in land tax nationally, the most disruption/hardship would be caused to the asset rich-cash poor, who at the moment are the biggest group likely to be highly vocal and resistant to any change. Across the world, advocators of land tax regimes see this as THE major barrier to introducing land tax.

    By encouraging the baby boomer group to downsize homes now (into, arguably, best use households), ahead of any change, their ‘asset’ in the family home will be smaller relative to their savings, and less hardship would be caused. This would then allow Baby boomers to be a lot less resistant to, and possibly even be supportive of, the change. They do care about the future of their children and grandchildren, and can see that the way things are going, their futures in land ownership don’t look great.

    Also, by encouraging the BBs to leave their big homes now, family-size housing stock will become available for the land’s best use. Who knows – if they downsize in droves, the price of family-sized housing may fall, or at least stay stable.

    Is it possible that we are seeing ‘Nudging’ taking place? This concept is being increasingly adopted by policy makers across the world, as a means of staging larger reform. If so, good on our policy makers for having a go.

    I wonder what effect negative comments have ? It could either play into the hands of the debate on stamp duty, or could it alienate the baby boomers against hearing further commentary from organisations like this?

    I wonder if there an opportunity to find out what is happening and offer to help and support the moves?

  3. Elizabeth20-05-2013

    Forgot to say, by moving into smaller retirement homes, the land tax on those would be a lot lower, and therefore more affordable to people on no income.

  4. Susan29-01-2016

    Ever increasing Council rates are creating a hardship for pensioners, some will be rated off their properties and now a further tax, land tax on the family home!
    Stop governments wasting money reduce costs like most private companies, then look at where it takes them without the ever extending hand of more taxes.

    GST was the golden panacea.to reduce hidden taxes….so what happened??

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