Stamp Duty Reforms Insult: REINSW
Reforms to Stamp Duty announced by the NSW Government is an insult to those people trying to purchase a home in NSW.
The Treasurer’s statement last week (5 November) provides no genuine relief to home buyers, it’s nothing more than hype and bluster in the lead up to the election, according to Real Estate Institute of NSW.
REINSW CEO Tim McKibbin said the State Government’s intention to index Stamp Duty by reference to the Consumer Price Index (CPI) starting from 1 July 2019 without adjusting the tax brackets is a real sleight of hand.
“NSW Treasurer Dominic Perrottet has acknowledged that the stamp duty rates have not been amended since they were introduced in 1986 and then says that he is going to apply indexation (CPI) to the set of tax brackets that are 32 years out of date!” Mr McKibbin said.
“In 1986 the Sydney median house price was $93,576 and the median unit price was $86,109.
“At that time the overwhelming amount of property transactions did not attract the higher rates of tax. Now with the Sydney median house price at $956,000 and the median unit price at $730,000 the overwhelming amount of transactions do attract the higher rates of tax.”
Mr McKibbin said by sitting on their hands for 32 years successive Governments have unconscionably profited at the expense of the home buyers including the most vulnerable - first home buyers.
“The first tax bracket tops out at, $14,000. I ask rhetorically when was the last time you heard of someone buying a house for $14,000?
“Yes, indexing is good, and the Treasury says had it been introduced 15 years ago then it would be better now - I agree. In fact, if it had of been done 32 years ago it would be even better and deliver a far more equitable outcome for the property consumer (see table below).”
Mr McKibbin said if the Government is serious about Stamp Duty reform it must adjust the brackets to reflect today’s median house price and then index it from there.
“To do anything other than that is delivering reform without substance and is just disingenuous political grandstanding.
“The Government’s own published data sets out clearly the continuing decline in property transactions and consequential Stamp Duty revenue.
“The irony? There is empirical evidence demonstrating that a reduction in the rate of tax will drive more additional transactions and consequently more revenue for Government,” Mr McKibbin said.
VALUE OF THE PROPERTY SUBJECT TO THE TRANSACTION Stamp Duty brackets - what they are and what they should be
* Note the above schedule sets out the adjusted stamp duty brackets by reference to the CPI increase from June 1986 to June 2018