Date posted: 30/03/2021

Chartered Accountants on NSW stamp duty reform: “It’s good to be bold, but let’s know the facts.”

More transparency of the financial and distributional impact of stamp duty reform is needed to safeguard future generations.

This is the call from Chartered Accountants Australia and New Zealand (CA ANZ) today as the NSW Government considers a once-in-a-generation change giving home buyers the choice to pay either stamp duty and land tax (if applicable), or an annual property tax.

“We support moving from stamp duty to property tax but there is a real potential of the proposed transitional method having a negative knock-on effect on future generations,” said Susan Franks, CA ANZ Senior Tax Advocate.

“The transitional method to ‘opt in’ is likely to be protracted and complex with three tax regimes running in parallel for many decades.

“The NSW Government consultation paper shows you hints of the likely and significant impacts this will have on intergenerational equity, wealth inequality and housing affordability.  

“It stated that this will cost at least $11 billion over the next 4 years and take 50 years to repay debt associated with the transition.”

This revenue loss comes at a time when the NSW 20/21 budget deficit is forecasted to be $16 billion, forecast revenue is down $25 billion over 5 years and debt is expected to be $104 billion in 2024.  

“Whilst debt is cheap at the moment, that won’t always be the case, so NSW citizens deserve to know now the long-term impact of this change rather than down the line when it is too late.”  

“Whilst debt is cheap at the moment, that won’t always be the case, so NSW citizens deserve to know now the long-term impact of this change rather than down the line when it is too late.”  

“There is currently no modelling available to answer serious questions that range from the sustainability of NSW’s revenue model to housing impacts on retirees and first home buyers,” Ms Franks said.

“It’s good to be bold, but let’s know the facts.

“A policy change of this magnitude is usually taken to an election rather than a budget, but since the election is not until 2023, this may not be possible. 

“Typically, in tax reform, it’s best to ‘rip the band aid’ and implement quickly, but there’s some further work required in NSW before that happens, we at least need the right information to guide us.

“We currently have a hot property market, with record low interest rates, high auction clearance rates and forecast double digit property value increases over the coming two years, so educating buyers around this tax change is going to be essential.  

 

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