There’s no shortage of experts who can tell us what is wrong with stamp duty and why it is one of our most inefficient and unpopular taxes.
However, policy and political gurus who can deliver a smart, sustainable and politically saleable alternative appear to be in much shorter supply.
Our state and territory governments have become addicted to stamp duty’s rivers of gold when property markets are booming. They scramble for other sources of revenue when markets dip (too often hitting up property owners and investors with a myriad of new taxes and surcharges.)
It’s the $20 billion question. How do we replace stamp duty with another revenue source for governments to fund the services they are responsible for?
The ACT is often held up as the reform model. The Territory government is eight years into a twenty year reform program to replace stamp duty with a land tax-style property rate.
Advocates of the ACT approach need to take a much closer and more critical look at how it’s actually played out for residential and commercial property owners there.
Total stamp duty revenue in the ACT has only fallen by one per cent over the past decade while the combined revenues of stamp duty, land tax and general rates have more than doubled over the so-called reform period. More of the tax burden has been pushed onto business.
And with another 12 years to go down the reform path, the ACT Government still can’t describe how and when stamp duty will actually be abolished. On the current trend, probably never.
Yes, we need to do something about stamp duty but simply swapping this revenue onto a new land tax isn’t as simple as it looks and certainly isn’t working in Canberra. We’ll need to think deeper and harder to deliver meaningful reform.