{"id":8340,"date":"2016-06-26T01:00:21","date_gmt":"2016-06-25T15:00:21","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=8340"},"modified":"2016-06-26T01:00:21","modified_gmt":"2016-06-25T15:00:21","slug":"stamp-duty-should-be-abolished","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/stamp-duty-should-be-abolished\/","title":{"rendered":"Stamp Duty should be abolished – John Cunningham"},"content":{"rendered":"

 
\nThe Real Estate Institute of New South Wales has called for an end to stamp duty, but how realistic is that? Institute president John Cunningham<\/strong> has called the tax unjust, inefficient and market distorting and he joins us to look at the alternatives.
\n <\/p>\n

Transcript:<\/strong><\/h4>\n

Kevin:<\/b>\u00a0 Stamp duty is one of those conversations that comes up all the time when we talk about affordability, and the different regimes for stamp duty around Australia are really quite amazing when you do look into it.
\nRecently, the president of the Real Estate Institute in New South Wales, John Cunningham \u2013 who is my next guest \u2013 made the statement that he believes Stamp duty should be abolished around Australia. It\u2019s probably not going to happen, but I\u2019m interested to get your view on that.
\nJohn, good morning, and thanks for your time.
\nJohn:<\/b>\u00a0 Good morning, Kevin.
\nKevin:<\/b>\u00a0 You\u2019re probably a bit surprised to see just how different the stamp duty levels are around Australia state by state.
\nJohn:<\/b>\u00a0 It\u2019s absolutely extraordinary, and I think one of the issues we have in Australia is that there are no level playing field on much of the legislation or taxation, particularly where it\u2019s levied from the states. Therefore, it\u2019s pretty confusing.
\nKevin:<\/b>\u00a0 It\u2019s interesting, too, to note that stamp duty is being called a wealth tax, but it\u2019s one of those taxes that is levied against anyone, even first-home buyers. If you\u2019re looking for ways to make it affordable, that would be a good place to start, I would have thought.
\nJohn:<\/b>\u00a0 Absolutely. There are two measures of stamp duty that are quite critical. Obviously, the higher you go in price \u2013 which is into the wealth area \u2013 the more tax you pay. This is an interesting concept that a lot of people don\u2019t realize. In New South Wales alone, the median house price now means that you\u2019re paying something like 4% average of the purchase price. So if you\u2019re going to save 20% as a first-home buyer, you\u2019d have to <\/b>stump up another close to 4% to actually secure the property. It\u2019s a massive inhibitor, particularly for that first-home buyer.
\nIn New South Wales and in many states, there is only relief for new dwellings, and as you and I both know, 95% of first-home buyers actually buy established housing, so there are not a lot of advantages there.
\nKevin:<\/b>\u00a0 Speaking about first-home buyers, it would be a great way to give them some leverage into the market if they abolish it for first-home buyers, but it raises the other question, too, of what we\u2019re now seeing as \u201crentvestors\u201d \u2013 these are people who will rent but go in and buy an investment property as their first property purchase.
\nI think it was Mortgage Choice said that about 36.6% of first-home buyers are actually investors, so it really makes it difficult to say, \u201cWell, let\u2019s abolish it just for first-home buyers\u201d for that reason, John.
\nJohn:<\/b>\u00a0 That\u2019s a really tricky one. That\u2019s how both of my daughters bought their first properties. They were living at home, they bought as an investment property to move into when they could afford to do that, and I encourage that. But then you\u2019ve got to ask the question, \u201cAre they first-home buyers? Are they investors?\u201d I think we\u2019re taking probably too narrow a view on how that\u2019s applied and, as I say, in many states if you\u2019re buying established housing there is no relief anyway.
\nI think that the whole tax debate at the moment is being looked at in so many little piecemeal sectors instead of taking a complete view, as the Henry Review did, to look at taxation as a whole. In that Henry Review, he quite clearly stated that you cannot break these tax reforms down into little segments; you have to take an overall picture.
\nAnd at the moment, many states are talking about adding stamp duty for foreign investors, and as some states \u2013 like Victoria \u2013that have already applied that, then you say, \u201cWell, there\u2019s another little piecemeal.\u201d You look at the negative gearing issue, and it\u2019s another that only applies to new dwellings \u2013 another piecemeal approach instead of getting to the nitty gritty of the whole situation.
\nUnfortunately, I think most people in the property industry are of the view that the GST was introduced to abolish these state taxes but no one has had the guts to actually implement the right GST reforms to make that happen. It doesn\u2019t appear that it\u2019s politically favorable to go that way, but at the end of the day, it\u2019s probably one of the most equitable taxes there is.
\nKevin:<\/b>\u00a0 A property tax is only one part of that whole scheme, which is what you\u2019re pointing out there \u2013 that taxation covers lots and lots of issues. It\u2019s almost like a bit of a Band-Aid; you put a Band-Aid on here, another one there, but you\u2019re creating more layers of problems that some say have got to be unfolded.
\nIt would take a very courageous government, I would have thought, to actually put the entire tax system on the table and pull it to bits.
\nJohn:<\/b>\u00a0 Yes, it\u2019s interesting. If you go back to the GST when John Hewson tried to introduce it and it was absolutely smashed by the opposition. When it finally came in, it was only a short period of time \u2013 remember that in 2000, there was a little hiccup for about six months, \u201cOh, my god; the GST is here\u201d \u2013 and then it was business as usual.
\nI think there is so much hype around this sort of reform that politicians play the game, and we\u2019re living in an environment where when you think about the federal term of parliament being three years, they can\u2019t get anything done. It\u2019s just politics for the first year, politics for the last year, and maybe a bit of progress for the middle. I think we\u2019re ultimately never going to get anywhere on these sort of things unless, you\u2019re right, someone actually has the guts to do it.
\nKevin:<\/b>\u00a0 Yes, good luck with that one.
\nWhat is the bottom line, John? What do you think are the alternatives? If the government said to you, \u201cJohn, what should we do?\u201d What would you say?
\nJohn:<\/b>\u00a0 In our tax policy, we\u2019ve put forward a proposal, and as you said Kevin at the beginning, the reality of saying good-bye to stamp duty is just not here in this environment. We\u2019ve suggested that we need stimulation in our marketplace to get certain supply chains moving
\nAn economy is driven by activity, so in certain states, and particularly New South Wales and Victoria to a certain extent and certain parts of Brisbane, you\u2019ve seen the clogs in the supply chain where people aren\u2019t moving. The cost of moving is prohibitive. They\u2019re reluctant to move from an area they like because they just can\u2019t find a home they want.
\nThat often happens right at the top end of the food chain where the retiree \u2013 the Baby Boomer now \u2013 is staying put in their home because they don\u2019t want to pay all of that money out in stamp duty. And then the first-home buyer has to actually find that extra 3% to 4% to buy a property.
\nWe believe that one of the solutions is to actually free up the first and the end. If you give some concession\u2026 And we\u2019ve suggested one of the possibilities is to give a 50% reduction across the board to first-home buyers up to a certain level \u2013 and that might vary from state to state \u2013 and also apply the same rule to the over 65s, that they are given actually one opportunity, one purchase, where their stamp duty is reduced by 50%.
\nBecause they don\u2019t appear to be wanting to change the threshold, which is the worst bracket-creep example you\u2019ve ever seen \u2013 no change in 30 years in New South Wales. I\u2019m not sure what it\u2019s like in Queensland, but we\u2019ve gone from 2% average to 4% average. We need to actually do something, because government is so reliant upon stamp duty revenue that they are reluctant to do anything, but once you get activity, you then can make up the difference.
\nKevin:<\/b>\u00a0 John Cunningham, president of the Real Estate Institute of New South Wales. Thank you for joining us today on the show, John.
\nJohn:<\/b>\u00a0 Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  The Real Estate Institute of New South Wales has called for an end to stamp duty, but how realistic is that? Institute president John Cunningham has called the tax unjust, inefficient and market distorting and he joins us to look at the alternatives.  …<\/p>\n","protected":false},"author":176692471,"featured_media":8341,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[32,34,10,11,13,36,25],"tags":[101],"class_list":["post-8340","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-buying-a-property-topic","category-finance-topic","category-kevin-turner-sponsored-channels","category-kevin-update","category-latest-story","category-property-investment-topic","category-sponsored-channels","tag-podcast"],"yoast_head":"\nStamp Duty should be abolished - John Cunningham - Realty Talk<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/channels.realty.com.au\/realtytalk\/stamp-duty-should-be-abolished\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Stamp Duty should be abolished - John Cunningham - Realty Talk\" \/>\n<meta property=\"og:description\" content=\"  The Real Estate Institute of New South Wales has called for an end to stamp duty, but how realistic is that? 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