Industry backs calls to drop stamp duty

Source: http://www.ninemsn.com.au 

22/06/2009 12:30:00 PM

By Stuart Fagg, ninemsn Money

Mortgage brokers have welcomed reports suggesting stamp duty on home loans may be scrapped.

Media reports suggest that a review of Australia’s tax system, currently underway and being led by Treasury Secretary Ken Henry, will recommend that the duty be abolished.

The Australian reported that that the tax, which is thought to be worth more than $14 billion per year to state governments, will be replaced by a surcharge on income tax, to be levied by state governments.

"If we are serious about making Australia’s tax system more efficient, this is an impost that must go," said Phil Naylor, CEO of the Mortgage and Finance Association of Australia. "Stamp duty on home loans is an inefficient and unnecessary cost on homebuyers."

He added that stamp duty, which varies in cost by state, discourages people from moving house and acts as an anchor on economic growth.

"It acts as one more reason to stop borrowers from upgrading to a more suitable home or to move to where there are better work opportunities," Mr Naylor said. "Removing the stamp duty on home loans is a simple measure that would boost activity in the housing and lending market and help drive the economy forward."

In last week’s NSW budget the state government surprised observers by slashing slash stamp duty on new homes.

The move was lauded by industry experts as a vital step in alleviating the chronic shortage of housing in the state.

Homebuyers will receive a 50 percent stamp duty cut on newly built houses worth up to $600,000 from July 1 until the end of 2009, with plans to review the measure in 2010.

Buyers will save up to $11,245 in stamp duty charges, under the new measure announced in the NSW budget today.

The Housing Industry Association (HIA) welcomed the move as a "much needed boost for the residential building industry".

"The saving in stamp duty provides a window of opportunity for anyone looking to buy a new home, including growing families, second and third home buyers and investors", Graham Wolfe, HIA executive director, said.