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.