Duty to supply housing – Dr Gavin R. Putland

Letter to the Herald Sun

Monday Jan 28th, 2008

It is appropriate that the surge in Melbourne home prices has rekindled debate on stamp duty, but not at all appropriate that the discussion has focused on the size of the duty instead of its base.

Stamp duty is a transfer tax on the total value of a property, including the building(s) and the land.

By taxing buildings, the duty deters construction and thus reduces the supply of housing.

And by separately taxing every transfer in the supply chain, it impedes the process of bringing new homes to
market (and discriminates against owners who need to move frequently).

The solution is to apportion the duty to the increase in the land value since the last transfer of title.

Dr Gavin R. Putland, West End, Qld

Read Gavin’s commentary on Stamp Duty and development levies