In his keynote speech at the 2018 Canberra Economic and Political Overview, held by the Committee for Economic Development of Australia, ACT Chief Minister Andrew Barr called on state and territory governments to abolish stamp duty for first-home buyers.
“Every economist in the country agrees that stamp duty is an inefficient tax, and one that puts another hurdle in front of first-home buyers by forcing them to either borrow or save tens of thousands of dollars on top of the cost of housing,” he said.
“While most jurisdictions have concession or exemption schemes – including the ACT – the eligibility thresholds often lag behind the real price of a home in today’s market.”
In July 2012, the ACT government announced a 20-year plan to phase out stamp duty. Barr now plans to accelerate the process for first-home buyers.
In January, the Housing Industry Association’s Stamp Duty Watch found that the ACT was the only jurisdiction where stamp duty, as a portion of the average house price, had fallen.
Nevertheless, the average stamp duty tax in the ACT was still the fourth highest in Australia, at $18,100.
Barr added that the state and territory governments could slash stamp duty in a “fiscally sustainable way” via the removal of first-home buyer grants.
“These grants no longer serve the purpose for which they were created – and arguably make housing less affordable,” he said. “They fuel price growth by adding many times their dollar value to the borrowing of purchasers, and distort decisions about where and what property people buy – channeling demand into particular segments of the market, driving prices up further.”
The territory’s first-home buyer grant dropped from $12,500 to $7,000 on January 1, 2017, and is only eligible for new homes.
Barr plans to take his proposal to the next meeting with his state and territory counterparts.
“Through this proposal to abolish first-home owner stamp duty and grants across Australia, we can deliver far more effective support to those trying to buy their first home,” he said.