19 May 2015
MELBOURNE:- Federal Treasurer Joe Hockey has endorsed moves by South Australia to abolish Stamp Duty and replace it with a nil exemption, broad-based land tax. He said the cost of an annual land tax would likely be less in the long term than upfront stamp duty.
“This exercise in ‘experimental federalism’ has our enthusiastic support,” Prosper Australia Policy Director David Collyer said today. “Stamp duty is a vile instrument. It traps people in and out of housing and is a handbrake on economic activity.
In Prosper’s submission to the SA tax review we said the removal of Stamp Duty will see:
- More and better building construction
- Lower rents
- Better matching of families and housing stock
- A greater propensity to buy (on ease of exit)
- Less traffic congestion
- A deeper, more active land market
In addition, Prosper estimates the SA government revenues of $886 million from Stamp Duty imposes a civic burden of at least $1,187 million, of which $300 million is cast on the ground in deadweight losses each and every year.
Mr Hockey told Adelaide’s The Advertiser South Australia would have an “early adopter” advantage by being bold and axing stamp duty.
“The (Abbott) Government is ruling nothing in and nothing out of the tax reform process but the Government is committed to a tax system that delivers taxes that are lower, simpler and fairer.
“All levels of government, including the states, recognise that in order to stay the same, we have to make changes.”
“Treasurer Hockey is far too modest,” Mr Collyer said. “Removing these entirely avoidable costs from South Australia will liberate the state economy. We believe the data shows the Weatherill government will advance South Australia’s economy with this reform and very substantial and enduring economic benefits are set to emerge. ENDS