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Taxes killing Great Australia Dream
Released 12 August 2010

The NSW IPART, in its Report on State Taxation of October 2008, ranked transfer stamp duty among the least efficient taxes. The Report scored transfer stamp duty poorly for efficiency, robustness and equity and found it adds to the cost of real estate transactions and distorts investment decisions.

The IPART Report also scored land tax poorly for equity, simplicity and transparency. No amount of broadening of land tax would ever solve its lack of transparency.

The original Intergovernmental Agreement (IGA) that was made between the Commonwealth and all States and Territories on introduction of the GST included the objective of “achievement of a new national tax system, including the elimination of a number of existing inefficient taxes which are impeding economic activity”.

The original IGA was replaced by a new IGA on 1 January 2009 under which the parties recognised “the importance of improving the effectiveness and efficiency of the national tax system” and that “further reform of taxes as an integral part”.

Instead of abolishing stamp duty on real property transfers, States and Territories have increased reliance on it and exacerbated its problems by maintaining high ad valorem rates, not indexing thresholds, collecting stamp duty on GST, not addressing cascading of stamp duty on stamp duty and stamp duty on GST, introducing ever more complex legislative amendments, failing to harmonise between jurisdictions and effectively increasing the rate of transfer duty through registration levies, most recently introduced in NSW under the title of “Torrens Assurance Levy”.

Land tax continues to be another barrier to investment in real estate.

REINSW launched its “Real Tax Policy” in the middle of the Federal election campaign, to call on Federal parties to get back on track for reform of property taxes that are impeding economic activity.

There must be a plan for stamp duty on real property transfers and land tax to eventually be abolished or significantly reduced.

The dream of home ownership is one of the great traditions in Australia which is under serious threat from over taxation.