Productivity Commission study will highlight stamp duty impact on labour market

The Productivity Commission yesterday released the issues paper for its Geographic Labour Mobility study, a study which I expect will highlight the adverse impact of stamp duty on the labour market. Stamp duty on property transactions, which significantly increases the cost of re-locating in Australia, means our labour market might not function as efficiently as it could. It means fewer people may move between regions or States to take up new employment opportunities. The Commission notes in its issues paper:

Some policies may indirectly impede geographic labour mobility. Examples include policies that prevent the recognition of differential occupational licensing schemes across regions, stamp duty on house purchases, differences in tax treatment of owner-occupied housing and private rentals, and policies related to affordable housing, including the location of public housing and price and assistance for private rental accommodation. [emphasis added]

The Productivity Commission study will add further pressure to State Governments to reduce stamp duties, which I’ve previously noted are bad taxes (see links below). Unfortunately, given Governments raise a lot of money through stamp duties ($3.5 billion in Queensland in 2013-14), I expect reform won’t occur in the short-term.

Scope to raise more revenue from gambling and cut bad taxes

Government has to rely on inefficient taxes to fix budget – GST reform needed

Inefficient State taxes

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