INTHEBLACK July 2020 - Page 44



F E AT U R E
// S TA M P D U T Y
STORY GARY ANDERS
LAND TAXES
VS STAMP
DUTY
$$$
$$$
$$$
$$$$$
I T S C R I T I C S S AY S TA M P D U T Y I S A N U N S TA B L E R E V E N U E S O U R C E
T H AT C R E AT E S I N E F F I C I E N C I E S I N T H E H O U S I N G M A R K E T, B E C A U S E
I T I S S U B S TA N T I A L A N D C A N I N F L U E N C E P E O P L E ’ S D E C I S I O N S T O
S E L L A N D B U Y P R O P E R T Y. W H AT I S T H E A LT E R N AT I V E ?
L
$$$$$
$$$
$$$$
$$$
48 ITB July 2020
ast financial year, across Australia,
state and territory governments
collectively reaped about A$19 billion
in property transfer tax revenues,
otherwise known as stamp duties.
Charged to the buyer whenever a property
transaction is settled, and calculated on the
sale price, stamp duties remain a lucrative
source of government income, especially for
the country’s most populous states.
For New South Wales, property stamp
duties generated A$7.4 billion in 20182019, while they brought in A$6 billion
for Victoria, and A$3 billion for Queensland
over the same period. Other state/territory
governments took in an additional
A$2.6 billion between them.
However, as large as these revenue
numbers were, they also highlighted an
underlying problem with transactionbased revenue streams.
The figures were all lower than those
that had been recorded from the previous
financial year, simply because of a softening
in property values from 2017-2018, and
reduced market turnover.
Property stamp duties are entirely pegged
to market conditions, and therefore are an
inherently unstable revenue source for the
states and territories.
With the economic fallout from the
COVID-19 pandemic in 2019-2020
placing both the residential and commercial
property sectors under severe strain, it is
highly likely that government stamp duty
revenues will fall once again as sale prices
slip in some regions and overall transaction
volumes drop.
INEFFICIENCIES AND INEQUITIES
At present, every Australian state and
territory has a different stamp duty
calculation method, although each
uses some form of sliding scale based
on the transaction price.
For example, New South Wales, Victoria
and the Northern Territory all apply fixed
percentage rates in a tiered structure,
depending on a property’s sale price.
Queensland, South Australia and the
ACT charge set dollar amounts based on
the sale price, plus additional fees for every
A$100 over certain price brackets. Tasmania
and Western Australia also charge flat stamp
duty dollar rates based on the sale price,
and then additional fees are levied on a
percentage basis for amounts over certain
transaction values.
Dr Gareth Bryant, senior lecturer in
political economy at the University of
Sydney, believes there is a strong case for
tax reform in the way state and territory
governments approach revenue generation
from property.
AT A
GLANCE

Stamp duties are
a lucrative source
of government
income, particularly
in populous states.

However, as stamp
duties are pegged
to market conditions,
they can be an
unstable revenue
source, especially
in difficult times,
when sale prices fall.

Economists see a
case for tax reform
in the governments’
approach to
revenue generation
from property.
intheblack.com July 2020 49

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