Stamp duty reform blasted for using outdated tax brackets
The CEO of a real estate body has continued his criticism of NSW’s stamp duty reforms, which were announced by the government earlier this month.
The Real Estate Institute of NSW (REINSW) has labelled the stamp duty reforms recently announced by the NSW government as an ‘insult’, and was announced only to try and sway potential voters, the real estate body announced in the statement.
Tim McKibbin, CEO of the REINSW, referred to the NSW government’s decision to index stamp duty to the consumer price index (CPI) but not make any changes to tax brackets as ‘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in 1986 and then says that he is going to apply indexation (CPI) to the set of tax brackets that are 32 years out of date!”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 the governments of the last 32 years have been doing nothing and making profits while home buyers have been suffering as a result.
“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?” he said.
“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.”
A more favourable outcome, according to Mr McKibbin, would be to adjust the tax brackets in order to reflect the median house price today and then index them, as published previously.
“To do anything other than that is delivering reform without substance and is just disingenuous political grandstanding,” Mr McKibbin said.
“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 also provided the stamp duty brackets that we use today, and what he believes they should be:
|
1986 brackets - Unchanged |
2018 brackets (Increased by CPI from 1986) |
|
$0–$14,000 |
$0–$37,580 |
|
$14,000–$30,000 |
$37,580–$80,520 |
|
$30,000–$80,000 |
$80,530–$214,730 |
|
$80,000–$300,000 |
$214,730–$805,230 |
|
$300,000–$1,000,000 |
$805,230–$2,684,090 |
|
>$1m and <$3m |
$2,684,090–$8,052,260 |
|
Premium property Duty over $3m |
Premium property Duty over $8,052,260
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