Cutting stamp duty in NSW could boost economy by $5 billion
SWITCHING stamp duty for land tax would not only make buying and renting a house cheaper - it would boost the state's economy by $5 billion, according to new modelling.
A KPMG report jointly prepared for the NSW Council of Social Service and the NSW Business Chamber found abolishing stamp duty on property transfers and gradually introducing a land tax would also create up to 10,000 jobs in the state.
Most jobs would be created in the housing, hiring, real estate and construction industries, the report said.
"Our state and federal tax systems are a real and significant factor in the housing affordability crisis in NSW," NCOSS CEO Tracy Howe said
"It would remove the disincentive for people to buy and sell property, making it easier for households to move as their needs change over time, enabling better use of the existing housing stock and reducing the upfront costs of home ownership.
"It would also place downward pressure on rents over time as investors seek less return on their investment to cover their costs.
"At a time when housing affordability is reaching crisis levels the NSW Government should be looking seriously at this proposal."
The proposed tax shake-up would involve applying land tax to owner-occupied land, where it currently does not apply.
NSW Business Chamber CEO Stephen Cartwright argued stamp duty was one of the most inefficient taxes currently in play in Australia.
"Stamp duty revenue is expected to grow to $8.7 billion in 2015-16 off the back of Sydney's booming property market, which is more than double the average annual amount collected by the NSW Government in the previous decade.
"A homebuyer would have to pay more than $41,000 in stamp duty costs when purchasing a house priced at the Sydney median which is now more than $1 million," he said.