Stamp duty remains the biggestfinancial hurdle for Western Australians looking to buy property, which is whythe WA Government should commit to reforming stamp duty in its 2021-22 StateBudget.
REIWA President Damian Collins said whilestamp duty was an important revenue earner for the WA Government, theinefficient and inequitable tax was ultimately a handbrake on the economy.
Stamp duty activelydiscourages home ownership and makes it significantly more difficult for peopleto move frequently. Our states finances are enviable. We have navigated thechallenges of COVID-19 relatively unscathed and are one of the only economiesin the world thriving right now.
If there was ever atime for the WA Government to implement bold reform to help alleviate housingaffordability pressures on West Aussies, now is it, Mr Collins said.
In its 2021-22Pre-Budget Submission, REIWA is calling for the WA Government to introduce fourkey areas of stamp duty reform that will improve the efficiency and equity ofthe WA property market.
1. Introduce a two-stream revenue collectionmethod for stamp duty
REIWA stronglyrecommends the WA Government introduce a two-stream revenue collection modelfor stamp duty, which gives purchasers the option to pay the hefty tax upfront(as is currently the case) or opt for an ongoing annual fee, calculated at thepurchase price of the property.
Stamp duty adds aconsiderable amount of money to the savings required to purchase a home, aswell as adding to the debt buyers take on, which adds thousands of extradollars over the life of the loan. This additional cost is too big of a burdenfor many buyers, pushing their dream of home ownership out of reach.
It also penalisesthose who move house more frequently. Often these people are simply moving forwork and are unfairly burdened with a tax that has no relationship to anyeconomic output, Mr Collins said.
In a 2020 surveyconducted by REIWA of more than 1,000 people, 90 per cent of respondents saidthey considered stamp duty to be a significant barrier to home ownership, while60 per cent said they would opt for an ongoing annual fee if given the choice.
Stamp duty in itscurrent form is a huge pain point for WA buyers. Reforming stamp duty by implementinga two-stream revenue collection method would remove one of the biggestfinancial hurdles buyers face and result in a significant productivity boostfor our economy, Mr Collins said.
2. Provide immediate $10,000 stamp duty relief forthose aged 65 and over
REIWA is calling forthe WA Government to immediately provide a $10,000 stamp duty concession forall people aged over 65.
Stamp duty preventsmany seniors from right-sizing into more suitable accommodation. Many eitherstruggle to raise the upfront costs or are deterred from spending a large sum tomove home, Mr Collins said.
Targeted stamp dutyrelief for seniors would assist with these upfront costs and help them toright-size into more suitable accommodation, which would free up housing stock andassist with mobility across the whole market.
3. Lock in the off-the-plan stamp duty rebate
With one-third of allunit purchases in 2020 estimated to be off-the-plan, REIWA is calling for theWA Government to lock in the stamp duty rebate for off-the-plan purchases,which is due to expire in October 2021.
"It is vital that the off-the-plan stamp duty rebate becomes apermanent feature of WAs property tax system. Incentivising the purchase ofmulti-unit dwellings will ensure ongoing construction work while reducing urbansprawl and encouraging infill development," Mr Collins said.
The current 75 per cent stamp duty rebate for off-the-plan constructionapartments has been essential in ensuring an ongoing pipeline of projects. We believethat without this ongoing incentive, the demand for apartments will soften,impacting the steady supply of diverse housing and the creation of jobs forWest Australians."
4. Remove stamp duty on the purchase of smallbusinesses
REIWA is recommendingWA join the likes of Victoria, New South Wales, Tasmania, South Australia andthe Australian Capital Territory in removing stamp duty on the purchase ofsmall businesses.
Whilst overall WAhas been incredibly lucky throughout the COVID-19 pandemic, those who have beenhit hardest by lockdowns and restrictions have been small businesses. They needour support more than ever, so its essential the WA Government does not standin the way and that they implement policies that boost productivity, MrCollins said.
As one of the onlyplaces in the country that still collects stamp duty on business assets, we arecreating a business environment that is less competitive than the easternstates and placing a cost burden on small businesses which discouragesproductivity and the entrepreneurial spirit. With more people making careerchanges than ever before, we need to pave the way for those who want to have ago.
