Stamp duty and other taxes under review

The Federal Government needs to do more to reduce the tax burden on new housing, according to the Housing Industry Association (HIA).

HIA says today’s release of the Tax Forum discussion paper by the government represents an opportunity for Australia to take steps towards reducing the large tax burden levied on new housing.

Managing director Shane Goodwin says the paper should be used to tackle Australia’s housing shortage.

“Independent economic modelling by the Centre for International Economics has found that the total taxation burden on a new home can be well over 40 per cent of its purchase price,” he says.

“Worryingly, most of the taxation burden is borne by the homebuyer. The Tax Forum could be used to reduce this large impost on homes and hence increase housing supply and improve affordability.”

HIA says there are some pleasant elements in the paper, including that the government has:

• committed to not changing the treatment of the family home in income support means test;
• reiterated the importance of improving the efficiency of housing supply;
• noted that stamp duties are a highly inefficient tax while also leaving room for substantial reform to this taxation element.

The Institute of Chartered Accountants in Australia’s tax counsel, Yasser El-Ansary, adds it’s critical that the tax forum is used as a catalyst for a broad-based discussion across the community.

“For some time we’ve been calling for a blueprint for tax reform and now it looks like Australia might have the opportunity,” he says.

“Ken Henry’s review of our tax system last year highlighted that key parts of our complex tax system are broken and require major rebuilding work over the short to medium-term. What we need to do now is prioritise how we tackle those issues over the coming five years.”

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