Agents want stamp duty relief
The real estate sector says the abolition of stamp duty would bolster rural property sales and dispose of an inefficient tax in the process.
The response comes after a comment by WA Treasurer Mike Nahan last week that the Government recognises that stamp duty on property transactions is one of the least efficient taxes in the country.
The Government said it was "keen" to engage in the Commonwealth Government's White Paper processes on national tax reform and reform of the Federation.
Gingin real estate agent Craig Hyne said he welcomed Mr Nahan's recognition of the inefficiency of stamp duty.
Mr Hyne, who is the principal of Country Values Real Estate, said he hoped the Government would reduce or remove this "major impediment" to people owning property in WA.
"In most cases, country property is not a luxury item, nor a passive investment, but rather the family home or a tool required to earn an income," he said.
"In the case of a $2 million farm purchase, the stamp duty bill is currently around $100,000, or 5 per cent of the property value. So this becomes an important consideration in the decision to buy."
Mr Hyne said in his area - which covers Gingin to Carnamah - there were 60 rural property sales worth a total of $72 million last year.
"By comparison, in 2010, there were 106 transactions worth $150 million," he said.
He said the fluctuations in the industry made expected revenue from stamp duty an unpredictable source of revenue.
"This variation is something that we as real estate agents are unable to predict," he said
"It is difficult to see how the Government could expect to budget on these year-to-year variations."
Real Estate Institute of WA president David Airey said that while he also welcomed the Treasurer's comments, he warned that any plan to replace stamp duty would need to be handled delicately.
"We need to look at the big picture and then come up with a long-term plan before we tackle the detail," hesaid.
But Mr Airey also said in order to "smooth out the humps" from inconsistent stamp duty revenue, a broad-based land tax was probably a more sustainable alternative.
He said the variance in revenue from year to year was massive.
"The Government takes around $300 to $400 billion per year in stamp duty, so we need to look at a 10 to 15-year transition plan," Mr Airey said.
"A broad property tax review is long overdue and must be considered, given the introduction of GST should have led to the abolition of stamp duty and other State taxes."
State governments have traditionally been reluctant to adjust stamp duty because it is a major source of their income.
But stamp duty collections have been weak in the past year, with the housing market delivering lower-than-expected revenue.
The WA Economic Regulation Authority is among those advocating sweeping reforms.
It called recently on the State to broaden the base and lower the rate of residential stamp duty and land tax.
Mr Nahan recently met the Real Estate Institute of WA over its proposal to abolish stamp duty in favour of a broad property tax, but it is understood the Government has not investigated a specific proposal.
·The key tax that is directly attributable to the sale of real estate in WA is total transfer duty (including transfer and landholder duty). It has been estimated that around 7 per cent of transfer duty relates to the transfer of non-real property.Stamp duty on mortgages was abolished from July 1, 2008.
According to Treasury, total transfer duty amounted to $1.6 billion in 2009-10 and $1.4 billion in 2011-12.
Adjusting these amounts for the 7 per cent estimated value of duty on non-real transfers, these amounts are $1.5 billion in 2009-10 and $1.3 billion in 2011-12 respectively.
