Lower housing cost and rental prices, more jobs, increased economic growth - these are some of the benefits that a new report said Australia can attain by switching from stamp duty to a remodeled land tax.
As reported by Pro Bono Australia, KPMG prepared a report for the NSW Business Chamber and NCOSS titled "Taking on Tax: Reforming NSW Property Taxes" which looked into abolishing stamp duty on property transfers and instead implementing a broad-based land tax.
The switch would mean that property owners would be subjected to broad land tax but they would no longer pay stamp duty on property purchases. The remodeled tax would also apply to owner-occupied land.
According to the report, in addition to making housing more affordable in the country, the switch will also boost Gross State Product to over 1 percent and create some 10,000 jobs.
"Our state and federal tax systems are a real and significant factor in the housing affordability crisis in NSW," NCOSS CEO Tracy Howe said.
Under the reformed tax, homeowners would be more encouraged to upsize or downsize depending on their needs as the disincentive to buy and sell property will be removed. This give boost to the housing stock and consequently to the house prices.
"It would also place downward pressure on rents over time as investors seek less return on their investment to cover their costs," Howe said. "At a time when housing affordability is reaching crisis levels the NSW Government should be looking seriously at this proposal."
While another report from the McKell Institute said that "land tax is one of the most equitable and efficient forms of taxation" and "if broadly applied, land tax is extremely fair," per The Australian Financial Review, it looks like individual homeowner is likely to shoulder a bigger cost. According to the publication, an average Bankstown owner could be charged from $3,750 to a hefty $9,000 each year.
