REIV CEO Enzo Raimondo has called on the Victorian State Government to initiate a program of stamp duty reform in tomorrow’s budget.
Mr Raimondo said that the government should introduce indexation to the stamp duty rates to ensure that Victorian home buyers are not forced to pay proportionally more as the price of a home increases.
"Current stamp duty rates mean that the state government charges proportionally more in stamp duty the higher the sale price, meaning that many buyers face the prospect of bracket creep as prices increase.
"House prices, like the prices of other goods and services naturally increase over time and home owners should not have to pay extra in tax because of that.
"In March 2007 homebuyers paid the equivalent of 4.2 per cent of the sale price in stamp duty on a median priced home but in December 2007 they paid 4.5 per cent.
"The unfair tax scales have resulted in stamp duty revenue increasing from a budgeted amount of 1.85B in 2003-2004 to actual revenue of just under $3B in the 2006-2007 financial year. Twelve months ago Treasury forecast that they would raise $2.8B and that was revised up to $3.5B.
"Tomorrows budget will reveal just how much extra the state has actually raised.
"With housing affordability at its worst for 30 years the unexpected increases in revenue create an opportunity to alleviate the problem for many first home buyers by increasing the first home buyers grant.
"It is also clear from the recent 2020 summit that the Federal Government wants to see reform of state taxes and Victoria should lead the way as it has done in the past.
The REIV has also asked the State Government to treat investment properties equally to encourage more investment in real estate and increase availability of rental accommodation.
"The need is illustrated by the fact that the rental vacancy rate in Melbourne remained at a 25 year low of 0.9 per cent in March.
"The main way to increase the availability of rental accommodation is through increased private investment. The current rates discourage investment by charging up to $2800 more in stamp duty.
"The Federal Government is providing subsidies to private investors and unless the state removes the higher stamp duty charges we will face a situation whereby the Federal Government gives and the State takes away," Mr Raimondo concluded.
REIV Newsletter | 6 May 08 |
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