It is lamentable that our State Governments are so reliant on a source of revenue, stamp duty, that is very costly to the economy and has no defenders outside of State Treasuries who would greatly miss the money if it were gone (see figure above). Stamp duty is almost universally regarded as a very bad tax that:
- raises the cost of housing, as the HIA highlighted once again yesterday (Stamp duty one part of a bigger problem for housing), and
- reduces labour mobility, increasing skills mismatch in the economy, and dragging down productivity (e.g. see this relatively new OECD working paper, Skills mismatch and public policy in OECD countries, co-authored by Queenslander Dan Andrews).
As I’ve commented many times before, stamp duty involves very large efficiency losses, and it should be eliminated, and greater reliance should be placed on land tax and GST, which are less inefficient (see my post Inefficient State taxes).