I’m a bit confused.
There’s been a lot of talk recently, in the Sydney Morning Herald for example, about that perennial favourite of economic topics, home affordability. And someone always mentions property taxes.
According to the Herald last week:
IT IS well known that the Federal Government played a large role in fuelling Sydney's housing boom with its halving of the capital gains tax…According to the Herald today:
In 2000 the Government sparked a frenzy of investment in property after it halved the tax paid on capital gains, while keeping the negative gearing loophole open. Earlier it had introduced a superannuation surcharge for high-income earners, which also increased the relative appeal of property.
As investors rushed into the property market, they fuelled an explosion in building activity [and] home prices… the halving of capital gains tax and the loophole of negative gearing was the main reason for the speculative boom in investment properties.
The Federal Government has urged the states to cut "excessive" stamp duties on conveyancing… to make housing affordability easier for first home buyers… Commenting on a report released yesterday that showed housing affordability had fallen to at least a 22-year low, acting Treasurer Peter Dutton said that in 2005/06 the states collected $10.8 billion in stamp duties…So which is it: do tax breaks on property encourage more investment in housing, which increases the price or do high taxes on property increase the cost of housing, which increases the price? Surely it can’t be both - or am I missing something here?
"Property taxes, such as stamp duty and land tax, now make up, on average, 32.5 per cent of the total revenue raised by the states from their own imposed taxes… Stamp duties on a median priced property in Perth add, on average, $20,500 to the cost of the purchase, he said…
I call on all the state Labor governments to cut stamp duty on conveyancing now and make housing a whole lot more affordable for first home buyers."