While today’s Queensland Budget was broadly ok and economically responsible, I was surprised by the removal of the stamp duty concession for existing home owners who buy a new place of residence. The Brisbane Times reports (Property market tipped to worsen on stamp duty increase):
The government today announced two new measures in its State Budget that will have a direct effect on the property industry:
- a $10,000 payout to people who sign home-building contracts or buy a new residence between August this year and January next year;
- an increase of up to $7175 on stamp duty for existing home owners who buy a new residence to live in. Previously non-investors received a long-standing discount.
REIQ chairman Pamela Bennett this afternoon welcomed the incentive for new homebuyers but said the removal of the stamp duty concession for non-first home buyers would wreck havoc on the state’s property market.
Stamp duty is a really bad tax, as noted in Ken Henry’s tax review (p. 49 of the Overview):
Stamp duties on conveyances are inconsistent with the needs of a modern tax system. While a significant source of State tax revenue, they are volatile and highly inefficient and should be replaced with a more efficient means of raising revenue.
Conveyance stamp duty is highly inefficient and inequitable. It discourages transactions of commercial and residential property and, through this, its allocation to its most valuable use. Conveyance stamp duty can also discourage people from changing their place of residence as their personal circumstances change or discourage people from making lifestyle changes that involve a change in residence. It is also inequitable, as people who need to move more frequently bear more tax, irrespective of their income or wealth.
I can understand the Government is short of cash after the floods and Cyclone Yasi, but this is not a good way to fix the Budget.