“Australia stands to gain $24.3 billion every year in GDP from 2047 if state governments phased out stamp duty replacing it with a broad-based land tax, a new report has found.
Transitioning to this new tax system would also boost government tax revenue to $11.2 billion annually by 2047.
Currently in all states and territories, homeowners must pay stamp duty when they buy a home. The transaction tax, paid in a lump sum, is charged at varying percentages depending on the jurisdiction.
If a broad-based land tax was introduced, homeowners would be charged an annual levy, costing someone in Sydney or Melbourne between $1500 to $2000 a year on a median-priced house, according to Grattan Institute research in 2016.
Infrastructure Australia’s Making Reform Happen paper made the case for major reforms to better deliver infrastructure including land use to prepare for the “profound change” Australia will face as the population is projected to grow to more than 30 million people by 2031.
Chief executive Philip Davis said revenue generated from switching taxes would come about from ‘productivity benefits’ rather than homeowners’ direct tax contributions.
For example, when land is rezoned or a new train station is proposed there is an uplift in value with the stroke of the pen, according to Per Capita senior economist Warwick Smith, and governments can capitalise on that under this proposal.
“Clearly the people who own those properties weren’t responsible for that uplift in value. If a land tax was well structured enough the government could be building infrastructure that essentially pays for itself,” Mr Smith said.”
