Saturday’s Australian Financial Review always needs a nice read and today it is the ACT government’s progressive removal of Stamp Duty that increased council rates on a million dollar property from $2200 a few years ago to $3000. What a terrible thing to do!

Mather, Ludlow & Schlesinger are astonished the Barr government was returned after imposing a Big New Tax on land holders.

In passing, they acknowledge land tax is efficient – according to the pointy-head economists who live on Mars. Faint praise indeed.

Over the page and without as hint of irony, the AFR’s real estate section sports a piece on why people are trapped in houses that no longer suit their needs. Huge costs of moving make owners stay home claims moving costs about 10 per cent of the capital transaction and Duncan Hughes has a nice table of the charges. Hidden in plain view is Stamp Duty – which makes up half the paralysing payables.

Let’s join the dots, shall we.

Stamp Duty imposes staggering costs on taxpayers. Not the $50,000 cheque homebuyers grit their teeth and pay to get a decent home, I mean the deadweight costs imposed by this very bad tax.

Federal Treasury calculates the marginal excess burden of Stamp Duty at 80c in the dollar. Before you glaze over, this means the buyers’ $50,000 slug actually costs $90,000. Collecting the same amount via land tax costs taxpayers about $45,000. Yes, you and I can make a profit from well designed taxes.

The ACT tax reforms have put the Territory on this path. The re-election of the Barr government proved good public policy can win. If you are prepared to listen to the men from Mars, I commend Dr Cameron Murray’s report on the early benefits of the changes.

This experiment in changing tax bases to virtuous taxes is being watched carefully by all the states. Conventional wisdom says any reformer is certain to lose government. Barr is proof this ain’t necessarily so.