Leading property analyst Simon Pressley has called on stamp duty to be abolished and replaced with a three per cent, Medicare-style housing levy.
Mr Pressley, who is Head of Research at Propertyology, said stamp duty was an unfair tax that hindered participation in the property market, with first-home buyers prevented from getting on the property ladder, while those needing to upsize or downsize are slugged for their hard work.
“The stamp duty model is a draconian dream destroyer,” Mr Pressley said.
“It takes far too much money from so few people, while simultaneously locking out millions of others from achieving life’s biggest goals.”
Mr Pressley said stamp duty originated in NSW in 1865 as a small handling or administration fee for processing a property transaction, but now states and territories charged $30,000-plus.
In the 2022 financial year, state and territory governments reaped $35.67 billion in stamp duty, up from $12 billion in 2011-12, Mr Pressley said.
“Stamp duty is each state and territory government’s greatest source of revenue, equivalent to $98 million per day and growing,” he said.
“This tax policy is the greatest abuse of power.
“They carry-on every week and pretend to have ‘care for tenants’, yet those tenants who put their head down and, over a chunk of time, save (say) $70,000 for a 10 per cent deposit on an entry-level house, governments then knock them down a peg by saying, ‘Don’t get too excited, I’m taking $30,000-plus’.
“And 85 per cent of the total annual stamp duty extortion are not first-home buyers.
“When a household needs to buy bigger digs to support their growing families and when those who’ve worked their way up the income ladder in pursuit of an opportunity to trade-up to a nicer home, they take $50,000 to $80,000.”
Mr Pressley said the government also penalised those investors trying to self-fund their retirement and not become a drain on the aged pension, which already costs $55 billion each year.
Stamp duty, land tax, capital gains tax and a premium on city council rates are among the taxes investors pay.
“Any society that has behaviours and policies which treat ‘investor’ as a dirty word is a society with a seriously bad attitude and very limited potential,” Mr Pressley said.
Mr Pressley said introducing a Medicare-style housing levy that would be paid by 100 per cent of the Australian workforce would generate as much income for the governments, be fairer, and stimulate property market activity.
“Instead of raising $35 billion per year from charging less than 5 per cent of Australian households with a $30,000 to $80,000 ‘handling fee’, it would be much more sustainable to charge 11.5 million households an annual ‘housing levy’ of (say) 3 per cent of their gross income, similar to the Medicare levy,” he said.
“Spreading such a big load will remove a huge barrier and create a pathway for significantly higher rates of housing participation.
“Without the imposition of an enormous upfront lump sum (stamp duty), more young people will be able to acquire their first home sooner (and with a smaller mortgage).
“Even more important for everyone will be the significantly improved household mobility rates.
“Growing families, lifestyle upgrades and relocations for career opportunities will all be winners.
“Tenants will benefit from having a bigger rental pool to choose from, and society will broadly benefit from a lesser amount of taxpayer funds used to pay aged pensions.”