Stamp duty is one of the main taxes under review at the Federal Government's tax review. According to the Treasury, it is an inefficient tax, and in it's paper singles out property and business tax as high compared to other wealthy countries.
Property taxes account for 9% of revenue compared to a OECD 6% average, and conveyance stamp duties are the sixth biggest form of revenue in Australia. This had led the Treasury to raise concerns over Australia's dependence on property revenue.
In its discussion paper released yesterday for the Federal Government's "root and branch" tax review, the Treasury said charging stamp duty on property sales created a "lock-in" effect which discouraged home owners from moving, dampening activity in the housing market.
"As a tax on transactions, stamp duties can discourage turnover and influence housing decisions. They may also encourage some home buyers to buy larger houses in order to avoid further stamp duty from subsequent moves into family-sized homes," the paper says.
The federal and state governments are likely to debate the issue as the Treasury begins an 18-month review of the tax system. At first review, Australians pay 125 separate federal, state and local taxes a year, and the Treasury is looking at reducing these different charges.
The Treasurer, Wayne Swan, has not indicated whether he wanted to approve cuts or not.
Join the discussion on Everything else about home loans
|