Stamp duty was called an inequitable and inefficient tax in the submissions, which sought to provide solutions to the housing supply shortage.

The Housing Industry Association (HIA) argues that stamp duty falls on a small group of Australians who may need to move house for employment, education or health reasons, and disproportionally affects vulnerable households who are forced to move by circumstance.

It says stamp duty has hurt both growth in the housing market and labour market, as workers are dissuaded from moving house for better employment opportunities.

Jocelyn Martin, HIA Deputy Managing Director of Policy & Industry, urged the Federal Government to lead the states in exploring measures to remove the tax.

"Excessive tax on housing still hinders growth in the market and housing affordability," Ms Martin said.

"Taxes such as stamp duty tax are a huge barrier for first home buyers and HIA notes some state governments are preparing to transition away from stamp duty tax.

"HIA would like the Federal Government to take a leadership role, working with the state and territory governments, to establish a dialogue through the National Cabinet to investigate measures that would support state and territory governments to remove stamp duty."

What is stamp duty?

Stamp duty is a state tax levied on most property transactions.

It is also often called transfer duty, as it includes the cost of transferring ownership from the seller to the buyer.

Stamp duty costs vary by state, but can often be tens of thousands of dollars.

Some states offer exemptions and concessions from stamp duty for first home buyers, or owner occupiers.

The HIA says that since the various taxes incurred throughout the production process of a property are reflected in the price, it is unfair to ask the buyer to pay additional tax on top of this.

They also claim stamp duty is inequitable because it only targets the relatively small cohort of Australians who are purchasing a home, whereas fair taxation should be far broader.

The introduction of the Goods & Services Tax (GST) in the year 2000 was originally meant to replace state-levied stamp duties. 

What is the alternative?

The Henry Tax review, commissioned by the Rudd Government in 2008, made recommendations about stamp duty reform.

The review, chaired by then treasury secretary Dr Ken Henry, called for stamp duty to be abolished, and instead replaced by annual land tax of the same amount, just spread over an extended period.

So far, the ACT has been the only state or territory to begin this process, and is now halfway through a 20 year transition to a broad based land tax.

New South Wales has implemented an optional program for first home buyers, and Domain research shows on a $1 million property it would take up to 16 years for property tax costs to equal stamp duty.

A survey by Statista earlier in 2023 revealed the average home ownership tenure was 11 years in NSW, though earlier research indicates nationwide hold periods were about 9.7 years.

In the submissions, the HIA acknowledged that stamp duty reform would not be straightforward, and such a significant reform could influence the GT revenue distribution between the states.

It said that progress on the reform "will require the collective willingness of the (federal) government and all states and territories."

What other recommendations did the HIA make?

The abolition of stamp duty was one of three key policy recommendations made in the submissions.

The HIA also called for the government to do more to ensure the housing supply can respond to changes in demand.

It said that the government needed to prioritise supporting the development of all forms of housing, and recommended a national data bank to keep Australians up to date on the outlook for the land supply.

It also called for policies that address the shortage of skilled tradesman in the residential building industry.

Ms Martin said that skilled migration and an increase of apprentices in the industry could address this.

"The Government should consult with (the) industry to develop a visa that will enable the residential building industry to alleviate trade shortages through skilled migration," Ms Martin said.

"Migration policies should also be complimented with schemes that focus on attracting and retaining apprentices.

"Highlighting career opportunities through trades and mentoring programs are needed."


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Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

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