Find out how changes would be beneficial to workers and businesses
Western Australia (WA) employers, through the Chamber of Commerce and Industry WA (CCIWA), demanded reform of stamp duty, which they described as “one of the most economically damaging taxes” for both businesses and the community.
Recently, the CCIWA published a national report called “Stamping out stamp duty” which detailed why the reform would enable WA businesses to generate more income and have long-term social prosperity.
“Underpinned by modelling conducted by the Australian National University’s Centre for Social Research and Methods, the report clarifies a highly practical option for economic reform,” CCIWA said.
Efficiency
Based on the said report, abolishing stamp duty and replacing a broad-based property levy would ease the burden for individuals as they could now move near jobs, family, and schools and for aged people to downsize later in life.
“With less commuting, there are benefits for the environment, and for business there are benefits in having a more mobile workforce,” the CCIWA explained.
“Enabling a more productive and efficient labour force will deliver broad economic benefits and help to ensure WA’s economy remains globally competitive in the years to come,” it added.
Fairness
Second, the CCIWA said that the reform would also ensure fairness, especially among the lowest-income households who need to move more throughout their lives to obtain employment and other opportunities.
“The ANU’s model shows the lowest-income households allocate double the proportion of their income to property taxes (5.5%) compared to top-earners (~2%),” the CCIWA said. “Making up 20 percent of the upfront cost of moving, stamp duty is an unfair barrier to Australians finding their most suitable and affordable home.”
Government revenue stability
According to the group, the reform would also provide a stable source of revenue for the government and assist in longer-term budget decision-making.
“A greater reliance on broad-based property taxes would provide a more stable revenue source, especially important for WA given the cyclical nature of its economy due to its reliance on the resource sector and the royalty streams it provides,” the CCIWA said.
The reform would indirectly improve revenue streams since the increased property turnover flows through to more substantial household consumption of domestic items, according to the CCIWA.
Community development
Lastly, it said that the stamp duty reform would also enable towns and city centres to evolve amidst the COVID-19 pandemic, “creating opportunities to form dynamic community hubs.”
It further said that with more people working remotely in the post-COVID world, businesses may re-think how they design and structure conventional office layouts.
“As world economies emerge from COVID-19, Australia faces ever-fiercer competition for global skills and investment,” CCIWA said. “Reform would improve labour mobility, competitiveness and facilitate the regeneration of town centres and cities.”
Following the call of WA employers, the CCIWA noted that without the Federal Government’s support, WA would unlikely achieve reform.
“CCIWA recognises that there are short to mid-term impacts that make the change difficult, but the long-term dividends are compelling,” the CCIWA said. “All major reform has its challenges and this is the right step forward for our nation.”
