Blog

未分類

Housing slump bleeds $10.6 billion from NSW government revenue

Waning buyer interest in new houses and falling home prices have bled NSW government coffers of an estimated $10.6 billion in lost stamp duty revenue.

Research from the Housing Industry Association showed the state had based previous revenue estimates on a trend of higher stamp duty earnings but would have to “severely” downgrade the forecasts.

This was due to the ongoing weakness in the housing market that meant stamp duty, which is charged for each property transaction, was no longer the income generator it once was.

Government could also get locked in a debt trap if it continued to be overly dependent on the property tax for generating revenue. Falls in stamp duty revenue were correlated with a rise in net state debt, a HIA analysis showed.

The HIA said government was basing its forward estimates on the tax, despite it being a volatile revenue generator swayed by unpredictable swings in the housing market.

Stamp duty accounted for one fifth of all NSW tax revenue raised in 2018/19, up from 15.3 per cent in the 2008/09 financial year.

The structure of the tax as a percentage-based charge on every home purchase has meant falling prices and lower transaction volumes could drive down revenue, according to the HIA.

Sydney prices have declined by 16.2 per cent and NSW by 7.6 per cent since their peak in 2017.

“Replacing stamp duty with a more predictable and equitable tax would provide state governments with a more reliable source of revenue,” HIA chief economist Tim Reardon said.

The HIA’s Stamp Duty Watch report showed the NSW budget had the second largest reliance on stamp duty revenue in the country, behind Victoria.

Victoria’s dependence on the tax has also cost the state government dearly — revenue from stamp duty dropped by $5.2 billion over the forward estimates.

“Alternative broadbased tax measures could deliver a more consistent and reliable revenue stream,” Mr Reardon said.

The ACT, which is seven years into a 20-year tax reform program to replace stamp duty, has the lowest dependence on the tax. It makes up only 13 per cent of total taxation revenue.


Via:realestate