The Housing Industry Association’s (HIA) latest Stamp Duty Watch report has revealed that home buyers paid $18.9 billion in stamp duty across Australia in the 2018-19 financial year, down from $21.3 billion the previous year.
According to the HIA, majority of the reduction in stamp duty revenues is “due to the downturn in the housing market”, which has been marked by a decline in the value of dwelling approvals, falling home prices and a drop in home loan approvals.
HIA chief economist Tim Reardon added that the downturn could cost the NSW government up to $10.6 billion over the forward estimates, with Victoria’s stamp duty revenue also revised down to $5.2 billion.
Mr Reardon said that states should begin to rethink their approach to property taxation, claiming that they’ve been too reliant on stamp duty for their revenue.
“Stamp duty is an unreliable source of revenue and the increased dependence makes states heavily susceptible to housing market downturns,” he said.
The HIA economist suggested that state governments consider replacing stamp duty with a “more predictable and equitable tax”.
“Alternative broad-based tax measures could deliver a more consistent and reliable revenue stream,” Mr Reardon said.
Research analyst at CoreLogic, James Shang, also expects policymakers to introduce alternative property taxation measures but said they would come in an attempt to offset losses incurred from deliberate policies to increase stamp duty concessions and ease housing affordability pressures.
“Lenders are asking for a 20 per cent deposit plus stamp duty, and if you think about it, for a first home owner, a 20 per cent deposit plus stamp duty is a pretty chunky number to come up with to get into your own home,” he said.
“I think we’ll probably see a push towards stamp duty concessions.”
The latest data from the Australian Bureau of Statistics (ABS) revealed that state and local governments collected $30.3 billion in property taxes over the 2017-18 financial year, up 6 per cent from $28.6 billion in the previous financial year and an increase of $9 billion over the past five years.
The ABS reported that property taxation made up 14 per cent of state government revenue over the 2017-18 financial year and was the sole source of revenue for local governments.
[Related: Stamp duty concessions could be on the cards]