Head of industry body says a review is long overdue
In the year 1986, “We Are the World” won best song and record of the year at the Grammys, Microsoft launched its first IPO and the Chernobyl power plant disaster unleashed radioactive material across Europe. In Australia, Lindy Chamberlain was released from prison, the Australia Act 1986 granted Australia legal independence from the UK and the current NSW stamp duty rates were brought into effect.
Thirty-five years later, the rate at which stamp duty is charged in the state remains the same, despite the median house price rising from $98,325 to $1,015,354.
According to REINSW CEO Tim McKibbin, the fact that the state government hasn’t reassessed the rate at which it charges stamp duty in line with the changing property market is “unconscionable.”
“The current tax rates were never designed to capture these transactions,” he said. “When the second reading speech of that particular legislation was read out in parliament, the then treasurer said, don’t worry about the higher rates of tax that will be applied here because that’s only going to apply to those really expensive properties over $300,000.
“Every property now, if you are in Sydney, would be over $300,000 - and the vast majority of properties in regional areas would be over $300,000 too.”
He pointed out that the current NSW Treasurer, Dominic Perrottet, would have been in preschool when the current rates were set.
“In my view they have left these things alone unconscionably and have profited from it,” he said.
According to McKibbin, REINSW has asked the state government to do economic modelling around whether lower rates would result in increased revenue, but the government has refused.
“There is plenty of evidence to demonstrate that if you reduce the tax you will have more transactions, and if you have more transactions, they will make more money,” he said.
He pointed to the introduction of vendor duty as an example.
“That involved both vendor and purchaser paying tax,” he said. “You would think having an additional tax would mean that you would make more money, however, what happened was the market froze - nobody transacted property.
“The year that they got rid of vendor duty they made an extra billion dollars more.”
He said the Northern Territory, the ACT and Western Australia all increased their revenue by lowering stamp duty rates.