ACT chief minister Andrew Barr has called on state and territory governments to abolish all stamp duty for first home buyers.
In a keynote speech at the 2018 Canberra Economic and Political Overview held by the Committee for Economic Development of Australia on Friday, Mr Barr labelled the tax a set-back for first home buyers.
“Every economist in the country agrees that stamp duty is an inefficient tax, and one that puts another hurdle in front of first home buyers by forcing them to either borrow or save tens of thousands of dollars on top of the cost of housing,” Mr Barr said.
“While most jurisdictions have concession or exemption schemes – including the ACT – the eligibility thresholds often lag behind the real price of a home in today’s market.”
In July 2012, the ACT government announced 20-year program to phase out stamp duty. Mr Barr plans to now accelerate the process for first-home buyers.
In January, Housing Industry Australia’s Stamp Duty Watch found the ACT was the only jurisdiction where stamp duty tax, as a portion of the average house price, had fallen.
However, the average stamp duty tax in the ACT is still the fourth highest in the country at $18,100.
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Mr Barr said state and territory governments can cut stamp duty in a “fiscally sustainable way” through the removal of first home buyer grants.
“These grants no longer serve the purpose for which they were created – and arguably make housing less affordable,” he said.
“They fuel price growth by adding many times their dollar value to the borrowing of purchasers, and distort decisions about where and what property people buy – channeling demand into particular segments of the market, driving prices up further.”
The first home buyer grant in the ACT dropped from $12,500 to $7000 on January 1, 2017 and is only eligible for new homes.
HIA ACT and Southern NSW executive director Greg Weller supported Mr Barr’s calls to abolish stamp duty but was cautious about the abolition of the first home owner grant.
“The first home owner grant is for new homes only and makes it easier to buy a dwelling, drives building activity, and strengthens the financial position of first home buyers choosing to build,” Mr Weller said.
“It is not inconceivable that a future government could choose to walk away (from) stamp duty reform, yet it would be highly unlikely that a grant for first homebuyers would be reintroduced.”
Last year the NSW government announced first home buyers in the state would be exempt from stamp duty of homes up to $650,000, resulting in ACT buyers looking to Queanbeyan to buy their first home.
Mr Barr plans to take his proposal to the next meeting with his state and territory counterparts.
“Through this proposal to abolish first home owner stamp duty and grants across Australia, we can deliver far more effective support to those trying to buyer their first home,” he said.