Report calls for land tax to replace stamp duty

A new report has recommended ‘broad-based land taxes’ replace stamp duties, arguing that policies which limit mobility impede the efficient functioning of labour markets.

The Australian Housing and Urban Research Institute’s (AHURI) May report, Housing tenure, mobility and labour market behaviour, found that renters were 15 per cent more likely to move in any given year than outright owners, granting them greater flexibility to adapt to changing labour markets.  

The report was informed by data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey which aims to track the lives of more than 17,000 Australians each year.

Owner-occupiers required wages 6 per cent higher than outright owners to change jobs, the report found, while arguing that the high debt levels of Australian home owners reduce individuals’ geographic mobility and as such; limit both households’ and the labour market’s capacity to respond to stress.

Australian wage growth is at a record low of 1.9 per cent, while, as of early May, an estimated 52,000 households risk defaulting on home loans within the next 12 months. 

Pointing to stamp duties as a drag on the geographic mobility of owner-occupiers, the report promotes the establishment of broad-based land taxes as a more “neutral” means of taxation.

“Initiatives that facilitate mobility for home owners, to avoid them being ‘trapped in place’ in areas with limited economic prospects, may enhance the efficient operation of labour markets over time,” authors Stephen Whelan of the University of Sydney and Sharon Parkinson from Swinburne University of Technology write.

“This report, and the institutional environment more generally, highlights the need to ensure that tax policy is as neutral as possible — that is, that it does not favour one tenure unduly over another.”

The report also underlines social housing as a key area for improvement, recommending a boost in supply of social housing in areas with growing job markets and access to public transport and infrastructure.

[Related: Low wage growth dampens consumer confidence: ANZ]

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Lucy Dean

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