Eliminating the stamp duty in NSW will create a race to the top for other states to level the playing field and start the ball on broader tax reforms, economists say, while warning that the planned plan to exclude more valuable properties it is defective and will create problems in the future. clue.
One of the major reforms to NSW’s budget next week will be a measure to give homebuyers a choice between an annual land tax or a one-time stamp duty. UNSW economics professor Richard Holden said the plan to phase out stamp duty would increase “competitive pressure” on other states to follow.
The phasing out of stamp duty will help buyers enter the market and should facilitate supply by making it cheaper for people. Credit: Flavio Brancaleone
“Suddenly, Sydney looks more attractive than Melbourne if Melbourne doesn’t match that because you can extend the stamp duty burden over time, in a way you can’t do in Victoria,” he said.
“This is good news for people who are thinking, ‘Well, I want to live in Melbourne, I want to live in Sydney,’ and so I think Victoria will be under some pressure to respond.”
But Holden said the reported plan to foreclose the top 20% of NSW residential property prices was a mistake that runs the risk of creating a two-tier system, and that property prices “are very unlikely “be much cheaper in the long run, the proposal. you are likely to see a growing number of excluded properties.
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“They will have to deal with it later. In the meantime, there will be good-knows-what kind of distortions in the real estate market as a result,” he said. “They should do well now.”
Angela Jackson of Impact Economics said that while it would ideally apply to all properties, some renovations in this space were better than none. The stamp duty fluctuates with the value and volume of property sales, and an annual land tax would eliminate that volatility, he added.
Jackson said people currently face a significant tax when buying a property, which prevents some transactions from occurring, which could deter people from reducing their size when faced with a significant tax. about a new property.