Yesterday REIWA president David Airey issued a call in the West Australian newspaper for the WA government to abandon Stamp Duty and fund this by removing the many wheezes from the tattered State Land Tax. Hooray!
“It’s time to recognise that stamp duty on property as a means to raise revenue is clumsy, inefficient and out-dated.
“REIWA calls on the Government to have a serious look at broadening the land tax base to all property owners with a view to abolishing stamp duty altogether.
“The benefit to property owners is the simplicity of a modest, annual land tax as opposed to “bill shock”, when hit with a huge stamp duty tax in the tens of thousands when they transact.
“In some cases stamp duty is so prohibitive to potential buyers that they stay put, jamming the market and not allowing established homes to flow into the first-homebuyer pool.
“A broad-based land tax was proposed by the Henry tax review in 2010 and has merit.
“It’s time for a mature discussion around this proposal with the aim of creating a long-term plan for a better system of property taxes – one that’s not at the mercy of an anxious treasurer every financial year.
Removing Stamp Duty would do wonders for the flexibility of the property market. Lowering the cost of change would lift labor flexibility and productivity as workers could easily move to where their skills are most highly valued. Families could trade up and down as their circumstances change. Everyone benefits.
Increasing the number of property sales would also increase RE agent activity and income, but transaction costs are dwarfed by the greedy government take and their modest self-interest here is easy to forgive.
The changes to State Land Tax are easy to implement: flatten the rate, remove all exemptions and thresholds, and use the proceeds to strike out a tax that stifles productive activity. If the WA Barnett government embarked on this piece of experimental federalism, their property market would enjoy an impressive turn of speed. Arthritic eastern states, take note.
Before we get too excited by his long-sightedness, the REIWA also calls for another flabby First Home Vendor’s Boost – economic poison that inflates the cost of land everywhere for everyone. Sorry, Mr Airey, that’s a terrible idea. We need to end the era of sweeping government manipulation of the property market.
I cannot locate Airey’s West Australian article on-line. Attached is a PDF of the print original. Thanks to Seven West Media Limited for giving voice to an idea we all should embrace and to John Massam for the scan.