Australia Has Yet to Replace Stamp Duty, Despite It Being a Horrible Tax

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The Australian Capital Territory (ACT) is leading the way in replacing stamp duty with a more stable and fairer form of taxation.

Most economists and politicians concur that stamp duty is a terrible tax. However, it serves as the lifeblood of almost all state and territorial governments.

A new analysis by Victoria University’s Centre for Policy Studies showed that “eliminating stamp duty and funding the difference with land tax would result in a 4.7 per cent decrease in buyer prices and a 0.1 per cent decrease in seller prices.

Stamp duty creates an artificial barrier to homeowners who wish to move house, often resulting in them remaining in their current home out of financial necessity.

In larger cities such as Melbourne, the stamp duty on the average home can be upwards of $40,000 – a figure that is far too high for most to bear. 

Even more so, stamp duty functions as a de facto divorce tax. Each spouse of a divorcing marriage must pay stamp duty when purchasing a new house after the family home has been sold to allow for asset division. 

“Switching from stamp duties to land taxes nationally would increase GDP by $17 billion annually in 2018, the Grattan Institute claimed.

Even though most states aren’t doing so, only the Australian Capital Territory has eliminated stamp duty since 2012, and it is expected to take 20 years to complete. 

Others are only adjusting stamp duty to produce what essentially amounts to a first-home buyer incentive.

The Andrews government in Victoria is only expanding an already existing system of exemptions for qualified first-time homebuyers. These exemptions are available in New South Wales, Queensland, Western Australia, and Tasmania.

ACT’s initiative towards eliminating stamp duty could have far-reaching implications for the housing market and help more Australians achieve their dream of owning their own home.

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