REIWA
The Real Estate Institute of Western Australia (REIWA) has called on the Federal Government to lead the way with stamp duty reform at the upcoming Economic Reform Roundtable.
President Suzanne Brown said stamp duty was a highly inefficient tax and significantly impacted productivity.
“Stamp duty is effectively a tax on moving. It leads to the inefficient use of housing by constraining a household’s capacity to move to take advantage of new employment opportunities or to downsize to a more appropriately sized home,” she said.
“Stamp duty significantly impacts labour markets by discouraging people from moving closer to work within the same city, affecting travel times and costs. It can also deter people from relocating for employment opportunities. This in turn affects businesses who may be unable to find staff or recruit the best candidate.
“Commercially, stamp duty can deter businesses from relocating to larger or more appropriately located premises, or purchasing additional premises. This limits business growth, output and employment opportunities, and in turn, the broader economy.
“REIWA has been a long-term advocate for replacing stamp-duty with a broad-based land tax. Productivity benefits will arise from people being able to move to residential properties that better suit their preferences, increasing labour mobility and reducing commuting costs. Benefits will also arise from more productive land use and increased commercial investment.”
Ms Brown said while stamp duty was a state-based tax, the consequences were national, with labour markets becoming more national in scope and mobility barriers impacting workforce responsiveness across state borders.
“REIWA believes reforming state-based stamp duties must be a national productivity priority,” she said.
“Although levied by state and territory governments, the economic inefficiencies created by stamp duty have profound consequences for national labour mobility and economic development.
“We acknowledge the transition from stamp duty to a land tax will have an impact on state and territory governments’ budgets and are calling on the Federal Government to incentivise reform with financial support.
“Within the housing space, there are existing precedents through which the Commonwealth incentivises states to achieve desired outcomes, such as the $3 billion New Home Bonus. Similar financial incentives could be introduced to assist state and territory governments transition to more productive tax settings.”
REIWA has also called for there to be no changes to negative gearing or capital gains tax settings to ensure an adequate supply of rental properties.
“The rental market provides an essential role in productivity via labour mobility and availability, particularly in regional areas,” Ms Brown said.
“In WA, the ongoing shortage of rental properties is hampering regional businesses’ ability to source employees, preventing them from expanding, and in some cases, forcing them to close or limit hours of operation.
“We know investors are sensitive to legislative change. There were dramatic impacts in WA following the deeply unpopular COVID rental legislation.
“While other factors also came into play, this policy, and potential changes to the Residential Tenancies Act, played a role in a mass exodus of investors in a fairly short period of time. This reduced rental supply by nearly 9 per cent, or 20,000 properties, and contributed to the rental crisis of the past few years.
“Respondents to a recent REIWA housing survey indicated changes to property taxes (83 per cent) would influence their decision to sell their investment property. Changes to property taxes would also deter potential investors (82 per cent).
“REIWA recommends there be no changes to negative gearing or capital gains tax for investors. With the nation in the midst of a rental crisis, stable tax settings are essential, otherwise investors will exit the market, potential investors will be deterred, and the current crisis will be perpetuated.”
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