The REIV has released its State Budget submission for 2012–13, highlighting a need to continue state-based tax reform, assist first home buyers and reduce taxes to promote investment in Victoria.
REIV CEO Enzo Raimondo said that, with stamp duty revenues reducing due to the slowing economy, it was timely to reform the structure and level of property taxes to improve equity, remove double taxation and promote investment.
The current structure of property taxes in Victoria is inefficient and discourages the necessary investment in housing and commercial property.
Residential home buyers are subject to bracket creep when prices rise, leading to an increasingly high level of taxation. This not only results in a higher level of stamp duty for every dollar spent on a home but also discourages people relocating.
An anomaly of the tax system is that investors are subject to higher stamp duty at the same time as the community relies on them to provide the majority of rental homes.
Another anomaly is that when a buyer spends $550,001 rather than $550,000 on a home, they pay an extra $3,100 in duty. There is no sensible reason for that.
The REIV also applauds the focus on assisting all first home buyers through cuts to stamp duty and encourages the government to continue the program, even extending it if Budget constraints permit.
It is also clear that the policy aim of the Bonus – boosting the construction of new homes – has been met, making it unnecessary to provide additional funding for the program at this time.
Equalising assistance for all first home buyers will provide them the choice about where to live, rather than encouraging them only into new homes.
It is also high time for the levying of stamp duty on GST in non-residential transactions to cease. When an office block, warehouse or factory is purchased, the new owner has to pay GST on the purchase itself and then stamp duty not only on the value of the property but the GST component as well.
This anomaly has been in place since the GST was introduced and it is time it was corrected.