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Great Australian Dream trashed by Commonwealth and State tax regimes
6 August 2010

Gillard and Abbott must act to curb cost of taxation which is killing home ownership dream

Out of control property taxes are combining with rising costs of living to all but kill the dream of homeownership for tens of thousands of Australians.

With both parties making cost of living a key election issue, REINSW has called upon Julia Gillard and Tony Abbott to detail how they will reform unfair tax regimes which threaten home ownership for Australian families.

“Australian governments are driving up cost of living pressures and keeping thousands of Australian out of home ownership,” said REINSW CEO Tim McKibbin.

“It is not enough for both leaders to blame each other for driving up the cost of living when taxation regimes supported by both parties are killing the Great Australian Dream of home ownership.

“Worse still, the blind eye of the Commonwealth has meant that State and Territory Governments of both persuasions have been able to fleece home owners and property investors of additional revenue and at the same time kill the Great Australian Dream.

“REINSW has launched its ‘Real Tax Policy’ in the middle of the Federal election campaign calling for landmark reform of property taxes across Australia.

“In the context of a weakening global economy, it is vital that whoever wins the election urgently reforms property taxation at a Commonwealth and State level.

“With dark clouds on the global economic horizon, Gillard and Abbott must declare their hand on property tax reform and how they will bring the States and Territories to account.

“REINSW is taking a national approach to this issue because for years successive federal governments have allowed the continuation of the stamp duty gravy train.

“The worst rort which Gillard and Abbott need to urgently confront is the stamp duty on GST which is the ‘tax on the tax’.

“The REINSW Real tax Policy has been delivered to both the Gillard Government and Abbott Opposition for response and seeks the following immediate actions;
 

  1. Prohibit stamp duty on GST;
  2. Incentivise the States and Territories to reduce transfer duty rates (inclusive of registration levies and other transfer taxes however named) by at least half;
  3. Incentivise the States and Territories to implement annual and fair indexation of transfer duty thresholds; and
  4. Incentivise the States and the ACT to reduce land tax rates and never broaden land tax to the family home (NT has no land tax).
The Commonwealth should also retain negative gearing for property investments and:

  • remove GST from residential property supplies as GST on residential property is unfair taxation
  • allow income tax deductions for stamp duty on investment property purchases (along the lines already available in the ACT due to most land titles being leasehold) (see s 25.20 of the ITAA 1997).
“The dream of homeownership is one of the great traditions in Australia which is under ever increasing threat from over taxation by successive governments.

“Our political leaders need to understand that it is pointless blaming supermarkets and petrol companies for driving the cost of living higher when governments drive property prices higher through their stamp duty and other tax grabs.

“This is a critical election issue and one on which the two leaders need to declare their hands,” said Mr McKibbin.


The REINSW ‘Real Tax Policy’ is available at www.reinsw.com.au/realtax