The Real Estate Institute of New South Wales calls for conveyancing Stamp Duty discounts for first home buyers and “property consumers over 65 years of age” in its submission to the NSW government‘s June 2016 budget.
They say:
“The ultimate goal must be to abolish stamp duty. It is an unjust, inefficient and market-distorting tax.”
Well, Hear! Hear! on their acknowledging the real damage stamp duty causes. Their concern is shared by the Productivity Commission, civic thinkers and just about every independent economic commentator we have.
But the REINSW wants to lower the burden only on first home buyers and the elderly. The bad outcomes for everyone else can stay in place.
Let’s dig a little deeper. Stamp duty is a strange beast – the legal incidence falls on buyers while the economic incidence falls on sellers. This means the buyer writes the cheque to government while the value going to Treasury comes entirely from the seller’s pocket.
So, assisting FHBs with a stamp duty discount would be trousered by those who sell to them – without even a thank you.
And I see no earthly reason why the elderly should be singled out for stamp duty assistance. This handbrake on transactions affects all activity, not only down-sizers over a certain age.
Worse, the REINSW says not a word about how the losses to revenue in assisting vendors to FHBs and over 65’s could be made up. We dignify this behaviour with the name cost-shifting.
Later, it seems to make a bold suggestion:
“…that people who purchase property for land banking purposes should pay additional land tax as a penalty for not providing the property for the benefit of the community.”
This might be a call for a differential land tax on englobo landbanking – perhaps clumsily worded. Sadly, it is no such thing. It would impose on government the obligation to prove land-buyers intended to land bank. The recent Metricon case has already torn a hole in land tax collections from landbankers. This move would cement-line the hole and turn it into a landbanker’s atomic bomb shelter.
It is time the property lobby got real about who benefits from the exemptions and wheezes in property taxes. Stamp duty reduces transactions and its removal would be of great assistance to RE agents – who live or die on the sales they close.
The obvious substitute – a universal nil-exemption State Land Tax – should be embraced by the REINSW. It would save billions of dollars of taxpayer’s money currently spilled on the ground.
RE agents get a bad press for being fast and loose with the truth. Their peak body’s behavior is no better.
The problem with Land Tax, from an estate agent’s point-of-view, is that it lowers sale prices and hence their commission. This would be especially so if the Land Tax collected (as it should) the entire value accrued due to efforts from the surrounding community (the ‘economic rent’), leaving the landowner to pocket ONLY the value of his improvements on site. Thus, no real help is likely from the real estate sector, any more than it is from the finance sector. In short, perverse vested interests have dug in all over the landscape so as to entrench a system of ‘property values’ which is based on theft — theft of land from the Creator and theft of land value from the community & future generations. No economic system so solidly based on theft can survive socially, economically or financially. That it has done so for 2200 years, with increasingly abusive & febrile results, is just a blink in time.