Government looks into cost of cutting stamp duty

If you’ve been following all the talk about housing affordability, then you’ll know one of the areas the government is being pressured to explore is the issue of stamp duty.

The issue of cutting stamp duty has been raised many times recently, with the Victorian Government already announcing it will cut stamp duty for first homebuyers on properties worth less than $600,000.

Now, the Federal Government has asked the Parliamentary Budget Committee to cost a Greens proposal to cut stamp duty.

Stamp duty is a big source of revenue for State Governments, so the Federal Government would give an $800 million loan to the states to offset the loss.

The states would then have to rely on land taxes to pay the Federal Government back.

So, what impact would it have on home buyers?

Well, as the Brisbane Times reports, home buyers could save tens of thousands including $40,000 in Sydney and $55,000 in Melbourne.

Instead, states could charge a land tax of $1 for every $1000 the property is worth – costed by Grattan Institute research.

The Grattan Institute has backed the plan, although the Grattan’s John Daley said it would help older Australians downsize.

“It deals with the situation of older people who are in a house that is maybe larger than they want,” he told the ABC’s AM program.

“They know that if they move from property one to property two then their net wealth will reduce because they will still have to pay the stamp duty.”

So, will it actually get passed?

Well, given that it’s been costed, it’s likely to be debated in parliament.

But Treasurer Scott Morrison questioned the overall effect cutting stamp duty would have on housing affordability.

“On the issue of stamp duty, I welcome it but at the end of the day if that just means that people just bid up more at the auction because they can borrow more because they don’t have to pay stamp duty, obviously, that will just take prices in one direction,” he told Radio 2GB.

So, what do you think? Do you support cutting stamp duty and replacing it with a land tax?