THE Victorian Government should urgently explore state‑based options to reform stamp duty, including investigating the feasibility of abolishing it and implementing a broad‑based land tax in its place, a parliamentary committee has recommended.
The Legislative Council Economy and Infrastructure Committee tabled the final report of its inquiry into land transfer duty fees in the state’s Upper House yesterday.
Committee chair Georgie Purcell said the inquiry had heard that stamp duty is inefficient, unpredictable and inequitable.
“Unfortunately, it also represents a significant percentage of the government’s budget, so it’s difficult to eliminate without impacting current service delivery.
“There are alternative models that we’d like to see the government explore further,” she said.
The committee’s report recommends the “Department of Treasury and Finance model and publish the findings of ‘switch on sale’, ‘credit’ and ‘gradual transition’ proposals.”
The committee made 12 findings and three recommendations, including that the government address the issue of bracket creep, that has increased the cost of stamp duty well beyond what was originally intended.
It also recommends Victoria consider taking additional measures to increase housing supply, including strengthening housing targets.
The report found that national reform of stamp duty would better address its negative impact on housing affordability, economic mobility, and market efficiency, for more Australians.
“Implementing comprehensive and uniform reforms is an opportunity to promote housing accessibility and affordability, stimulate economic growth, and create a fairer and more efficient housing market for all Australians,” the report found.
“We think there needs to be a national approach and we’ve recommended Victoria advocate for that to the Federal Government,” Ms Purcell said.
The inquiry received more than 50 submissions and held five days of hearings.
The report is available on the committee’s website.
Editor, It would appear your readers like the idea of collecting the economic rent through a land tax. That is a major breakthrough in economic reform.
London to a brick that any “new” land tax implemented by a Labor government will be deleterious to the interests of agriculture and farmers when compared to “old” stamp duty legislation.
I am afraid Peter you are incorrect. A land tax is an efficient way to collect the economic rent. Collecting the economic rent has many benefits for the economy and society including:
1. Forces better land utilization by encouraging landowners, factory owners, homeowners to put lazy assets to work.
2. Removes the boom/bust from the land cycle.
3. Makes farmland less expensive to young keen farmers who want to enter/ expand farm operations.
4. Makes homes more affordable to young people to buy a home and have families.
Most farmland is operating way below its potential. A land tax on the unimproved value of the land is a financial incentive to farmers to make better use of their land. This increases the productivity of the economy. It’s not about Labor or Liberal governments; it’s about good public policy to drive a more efficient economy.
Everyone who has the privilege of occupying land should pay land tax on the unimproved value of the land. No exemptions. Homes, Farms, Factories, Churches, Schools everyone, No exemptions. None.
Land is the largest asset class and if all occupiers of land pay equally, a small tax in the dollar will raise enormous revenue. The challenge then is to have wise legislators to spend it wisely – education, research and development, health; certainly not toys like out-of-date submarines.
This is a major achievement for economic reform. Land tax as an efficient way of collecting the economic rent and is the pathway to a “fairer and just society”, Henry George, 19th century American political economist. Further reading, ‘Progress and Poverty’, Henry George.
Well said, Peter Small. Arguably there’d be greater benefit for the state if other taxes – stamp duty and payroll tax – are reduced concomitantly as the land tax increases are applied. And maybe the state government needs also to address the thresholds, exemptions and multiple rate provisions that makes the current land tax a poor application of a good principle. i.e. As land values are already held progressively, there’s a very good case for a single rate in the dollar on site values.
Thanks, Bryan Kavanagh, for your support. Yes, a properly constructed uniform land lax should, as you say, eliminate a lot of other regressive and inefficient taxes.