The Legislative Council’s Economy and Infrastructure Committee is examining land transfer duty fees, known as stamp duty, which is tax paid by a purchaser on a property.
Victorian Treasury and Finance secretary David Martine said stamp duty brought in $10.4 billion, slightly more than one-third of Victoria’s state tax revenue for the 2021-22 financial year.
But the tax ultimately constrained individual and investor decisions.
“It may discourage individuals from relocating for opportunities such as a new job, or moving to a property better suited to their needs,” Mr Martine told the inquiry.
Estimates ranked stamp duty as one of the least efficient taxes in Australia, Mr Martine said, with a higher value of welfare loss to the economy for each dollar of revenue raised when compared with other taxes.
“The key in this is it needs to be replaced with something, and it needs to be replaced with something pretty big,” he said.
The only example of a state or territory transitioning away from property transfer duties is the ACT, which is gradually reducing duties while increasing rates.
The VFF in its submission said increasing the GST was the way to go.
“Tax reform in 1999 looked to replace a heap of inefficient state-based taxes with the GST,” VFF president Emma Germano said.
“That job was unfortunately never finished, and we are still stuck with taxes like stamp duty ... that impact business, drag on international competitiveness and act as a barrier for young farmers to buy farmland.”
Ms Germano said an expanded GST was the best option to replace stamp-duty, given that farmers rejected any idea that a broad-based land tax should be imposed on productive farmland, as a long-standing principle.
“The recent recommendation in NSW to replace stamp duty with a tax on farmland was an abject failure. It was totally rejected by the farming community with Premier Dominic Perrotet being forced to carve out an agricultural exemption,” she said.
“Victoria should not follow the same flawed policy and should focus its attention toward working with the Commonwealth and other states to finally clean up our tax system.”
26°C