By Deanne Jeffers
KEY industry bodies are calling on the Victorian Government to replace property stamp duty, amidst a Parliamentary inquiry investigating issues around land transfer duty fees.
Stamp duty, also known as land transfer duty, was introduced in Victoria in 1865 to raise revenue for the State Government. It is a tax paid by homebuyers on the purchase of property and is calculated based on the value of the property. The amount of stamp duty paid increases with the value of the property.
Peak association for real estate in metro and regional Melbourne, Real Estate Institute of Victoria (REIV), has suggested adopting a broad-based tax, that will avoid inefficient and disproportionate effects of house price bracket creep, while providing a more stable and predictable revenue stream for government.
“The REIV has long sought an abolishment of this tired tax,” said REIV CEO, Quentin Kilian, who will give evidence at the Parliamentary inquiry’s hearing next month.
“Stamp duty has created an excessive burden on home buyers for far too long, with fees for the median priced house currently sitting at approximately 48.9 percent of Victorian’s average annual income.”
Revenue collected by the State Government in 2021-22 from Stamp Duty was $10.3M, a 61.3 percent increase from the year before which sat around $6.5M.
“The nature of land transfer tax is dependent on market activity and performance, which impacts government revenue predictability,” Mr Kilian said.
“The fluctuation in revenue points to the fact that when households are in need, government revenue is likely to also be impacted making meaningful policy intervention more difficult,” Mr Kilian added.
Mr Kilian said that removing stamp duty would allow for a more sustainable market environment and encourage activity, benefitting the economy.
“Recent economic fluctuations, such as limitations on real estate activity during Covid and increases in interest rates, influence individual decisions to engage or not engage with housing markets, further impacting government revenue.
“As stamp duty increases the cost of moving, people may choose to remain where they are rather than pursue job opportunities elsewhere – contributing to the lack of skilled labourers in areas of need, negatively effecting productivity,” REIV’s submission states.
The REIV has urged the State Government to invite stakeholders and experts to contribute to a roadmap that supports home ownership while maintaining tax income for the state.