Federal Treasury entity gets behind push to scrap state government stamp duty

Removing stamp duty would increase housing mobility, and lead to more efficient use of the nation’s housing stock, according to research by the National Housing Finance and Investment Corporation (NHFIC). Families across all states and territories, except the ACT, are paying substantially more stamp duty when they move currently than they were 20 years ago, it noted. Victoria now has Australia’s largest effective rate of transfer duty on a median property at around 5.4% (around $45,000), compared to 4.2% (around $12,000) back in 2002. The report dubbed stamp duty an inefficient tax that impacts housing market mobility. A household that bought a Sydney median priced house four times over the past 20 years would have paid more than 10 times the amount of duty than a household making only one purchase at the start of this period, it pointed out. “Households that are considering downsizing and upsizing, or just seeking more space when they are working at home during COVID-19 wouldn't be penalised under a broad-based land tax compared with the current stamp duty arrangements across most states,” NHFIC CEO Nathan Dal Bon said . “Encouraging more household mobility through reductions in stamp duty leads to more efficient use of the housing stock which means people can better ‘right-size’ their own housing arrangements in line with their individual preferences,” Dal Bon added. The aim of transitioning from stamp duty to land tax is not to increase revenue per se, and the paper demonstrates that the transition can be achieved in a revenue neutral way. "The typical household across all states (except the ACT) would be better off paying land tax on a median property than transfer duty," it suggested, noting a household in NSW would have to pay a broad-based land tax for more than 14 years to be worse off, which is greater than the 12 year average holding period of a property. It noted the challenge of a revenue neutral swap between transfer duty and a broad-based land tax, under a slow house price growth scenario, would require approximately three times the amount of revenue as a faster transition ($94bn over a 20-year transition, compared with $32bn under a 5-year transition). The National Housing Finance and Investment Corporation (NHFIC) commenced operations in 2018, a corporate Commonwealth entity, part of the Treasury portfolio of agencies. The responsible Minister is the Minister for Housing, Michael Sukkar.