Queensland and Victoria have no plans to replace stamp duty with a New South Wales-style annual tax, despite experts saying a change in policy would help more young people buy their own homes sooner.
From this week, first home buyers in NSW can choose between paying stamp duty or an annual land tax on properties up to $1.5m.
Under the initiative, first home owners will instead pay an annual fee of $400 plus 0.3% of the property’s land value.
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They will also continue to be eligible for a stamp duty exemption on existing properties valued up to $650,000 under the state’s first home buyer assistance scheme.
But the state’s Labor opposition has vowed to scrap the scheme if elected in March, replacing it with a policy to abolish stamp duty on homes worth up to $800,000 and provide a reduced rate on homes of up to $1m.
Some experts say the NSW government’s program is a step in the right direction and have urged other Australian jurisdictions to consider a similar approach, dubbing stamp duty a “terrible” and “inefficient” tax.
But Queensland and Victorian governments have held firm, saying they are not considering either of the schemes.
“The Queensland government has no plans to adopt either of these initiatives,” a spokesperson for the state’s treasurer, Cameron Dick, said.
A Victorian government spokesperson said it currently offers “a range of initiatives” to help people “get into their own home sooner”.
This includes no stamp duty for first home buyers on properties worth $600,000 or less, with a reduced rate charged for properties worth up to $750,000. It also offers grants of $10,000 in Melbourne and $20,000 in regional Victoria for new builds and runs a shared-equity scheme that reduces the required deposit for homebuyers to 5%.
Prof John Quiggin, an economist at the University of Queensland, said stamp duty is a “terrible tax that is already riddled with exemptions and concessions”.
He said NSW’s program makes the housing market play more smoothly “in the sense that you don’t have this huge cost when you’re trying to move house”.
Quiggin said the issue should not be “a political hot potato” and a broader approach regarding stamp duty needs to be mapped out on a national level.
He said this would avoid political reluctance from states like Queensland, which was stung by its failed attempts to increase land tax for interstate landlords.
“Undoubtedly the Queensland government has been badly burned by the previous land tax episode when they tried to close the multistate loophole and got no support from NSW or Victoria,” Quiggin said.
“If you look at the political attack [the NSW opposition leader] Chris Minns is waging, it’s not party political. Any change like this can be made scary.”
The managing director of the Australian Housing and Urban Research Institute, Dr Michael Fotheringham, said stamp duty can hinder people from entering the property market.
“[Stamp duty] adds to the cost of entry and what ends up happening is people’s borrowing rises to meet that cost,” Dr Fotheringham said.
The Victorian opposition and the Greens are also calling for stamp duty reform.
“With the housing affordability crisis getting worse, the Greens want to see a proper debate in Victoria about how we can replace stamp duty with land tax to make housing more affordable,” the Greens leader, Samantha Ratnam, said.
“The ACT and NSW are already making the shift to land tax, which is much fairer.”
However, the housing spokesperson for the Greens in Queensland, Amy MacMahon, said the policies of the major parties in NSW “are just tinkering at the edges”.
“Instead of what looks to be an ineffective first home buyer incentive, our communities need bold measures that prioritise housing Queenslanders, not the profits of property investors,” MacMahon said.
The Victorian Liberals’ home ownership and housing affordability spokesperson, Jess Wilson, said she was pleased to see other states “explore reforms aimed at giving people greater opportunity to buy their own homes” and urged Victorian to follow suit.
“All options are on the table to reverse the decline in home ownership and ensure young Victorians have the same opportunities and benefits that previous generations have enjoyed,” Wilson said.