With the stage three tax cuts changes helping to bolster the flagging popularity of PM Anthony Albanese, we’re now focusing on one of the cruellest taxes imposed by state governments — stamp duty. This is an anti-good times tax that punishes those people who buy properties and other big purchases, such as cars and land related to a business.
The Daily Telegraph tells us today that “Sydney home seekers are splashing out more than five times as much of their income on upfront property taxes than previous generations. An alarming new report showed the $44,500 in stamp duty required to purchase a median priced home at $1.11m required six months of the average earners’ full-time post-tax income.”
In Sydney, that’s a rise of 5.4 times but the slug nationally is in the same neighbourhood. As the AFR’s Campbell Kwan reports: “The stamp duty burden has risen fivefold in just one generation, becoming an impost that holds back people from moving, changing jobs and even having children, new research by e61 Institute and PropTrack shows.”
Stamp duty is a political football kicked around the states with Kwan reminding us that “the NSW Labor government last year scrapped plans to reform stamp duty by its Coalition predecessor. Victoria and SA have introduced plans to scrap it on commercial property, but not housing. The ACT’s two-decade-long reform of stamp duty is stumbling.”
Meanwhile, in Melbourne, you’ll need six months-worth of income to cover the cost of buying a property. That’s $42,500!
However, because Sydney prices are so much bigger than Melbourne, the dollar amount of stamp duty on an average home is a whopping $44,500!
And yes, PropTrack economist Angus Moore is right when he says the excessive government taxes plus excessive property prices combined were a substantial barrier for new homebuyers.
CoreLogic data reveals that “house values in capital cities is up over 450% over the past 30 years, while unit values have increased over 300 per cent during that period.”
By the way, don’t forget younger generations also lose 11% for compulsory super and when you throw in the tax slug on developers for building homes, it looks like this is a government conspiracy to stop people from buying homes. And if it’s not that, then collectively the desire of governments to spend taxpayers’ money, which needs to be fed by taxes like stamp duty, is overloading potential homeowners, which will create generations of renters.
The sad thing about all these taxing stresses on Australians is that we don’t have politicians who either have the brains or the guts to do something about it.
Of course, politicians would point to stamp duty exemptions but as Angus Moore pointed out, “…some first homebuyers are eligible for stamp duty exemptions, but it caps out at $1m and decreases from $800,000,” he said. “So, anyone looking for a median price home (in Sydney) isn’t eligible for concessions.”
Worse still, downsizing, which permits older Australians to sell their home to downsize and put $300,000 into super, is being avoided by some people, who actually need to build up their paltry super because the stamp duty on a new place is too big!
Research manager at e61, Nick Garvin argues that stamp duty is a barrier for people finding the right home option but it’s not just a real estate problem, for the following reasons:
1. It reduces the numbers of over 55s downsizing.
2. It reduces the potential housing supply.
3. It can impact whether couples change jobs and have children.
4. It escalates the debts homeowners carry making them more vulnerable to interest rate rises.
5. It’s another anxiety issue in an era where mental health matters are a huge worry.
6. This in turn hurts the economy, job creation and so on.
Reforming stamp duty should be the easiest because most governments across the country are Labor, and as economist Saul Eslake told the AFR: “You’ve got seven out of the eight governments from the same political persuasion, so there probably isn’t a better time to get the federal and state governments to co-operate on something now.”
Will it happen? Nope. Why? We don’t have politicians with the calibre to do it.