Stamp duty relief would serve to further stimulate the building and construction sector in Tasmania in the wake of the COVID-19 pandemic, the state's peak property industry body says.
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The Property Council of Australia has called for states to abolish stamp duty and instead broaden the GST base.
In Tasmania, stamp duty - or property transfer duty, as it's officially known - is the state's second-largest source of own-source revenue, behind only payroll tax. It accounted for about 20 per cent of total state taxation revenue in 2018-19, bringing in $249 million.
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Stamp duty can be cost prohibitive, however, and can discourage people from buying property.
Property Council Tasmanian executive director Brian Wightman said changes to stamp duty should be looked at as a potential way of stimulating activity in building and construction.
"As we plan our recovery from the pandemic ... the role that stamp duty plays in hampering construction, including preventing young families from entering the property market, should be considered," he said.
"Relief from stamp duty on specific builds via remission or deferral, or by raising the first home builders grant would further stimulate the sector."
Indeed, the Master Builders Association has urged the state government to double the first home builders grant to $40,000.
The role that stamp duty plays in hampering construction ... should be considered.
- Brian Wightman, Property Council of Australia Tasmanian executive director
Economist Saul Eslake said he believed stamp duty should be scrapped altogether - but he disagreed with the Property Council's view that the GST base be broadened to make up the shortfall.
Mr Eslake said stamp duty should be replaced by a broad-based land tax that would encompass owner-occupied properties but continue to exempt farmland.
Land tax contributed $111 million to the state's coffers in 2018-19.
"Every economist worth his or her salt wants to get rid of stamp duty," Mr Eslake said. "It is the least efficient and most distorting tax of just about any that's ever been invented."
Broadening the GST base would create inequities in the tax system, placing a further burden on lower income consumers and favouring people with the means to purchase property, according to Mr Eslake.
He said a sound transitional arrangement would need to be agreed upon before completely getting rid of stamp duty; one which ensured that those who had already paid the fee weren't then expected to pay land tax as well.
"One way is to give people a credit for the land tax they would otherwise have to pay for any stamp duty they've paid in the last however many years," Mr Eslake said.
Meanwhile, Master Builders Tasmania, together with the Civil Contractors Federation Tasmania, has unveiled its vision for a supercharged infrastructure program, backed up by modelling from accounting firm EY.
Among the initiatives builders have floated are: a focus on making homes more resilient in the face of natural disasters; a plan to remove asbestos from public buildings and support owners of private buildings to do the same and; a proposal to bring forward 5 per cent of the state's infrastructure pipeline.
Premier Peter Gutwein has said the government will be embarking on the "most aggressive" infrastructure program in the state's history, expected to be detailed next week.
A state government spokesperson said additional housing "initiatives and incentives" would be a "significant component" of the program and would be announced soon.
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Rob Inglis
Rob Inglis is a reporter with The Examiner, covering state and federal politics. He is based in Hobart.
Rob Inglis is a reporter with The Examiner, covering state and federal politics. He is based in Hobart.
