- Property Council of Australia (PCA) calls for comprehensive review of all property taxes by 2025
- Challenge is to ensure tax regime does not create affordability challenges in the future
- Stamp duty concessions should be reintroduced
As the WA state election looms closer and closer, major property institutions are putting pressure on the next State Government for major legislative reform.
The Real Estate Institute of Western Australia (REIWA) has been advocating reform for tenancy law to ensure greater fairness for landlords and tenants, short-term investor incentives to tackle WA’s rental shortage (discussed here), and most notably urging the government to make stamp duty for off-the-plan purchases permanent (discussed here).
Now the Property Council of Australia (PCA), is following REIWA’s footsteps, urging the next Treasurer of WA to commit a comprehensive review of all property taxes by 2025.
With PCA’s Confidence Survey recording an uptick in confidence in the WA residential property market (in addition to REA’s latest report showing strong homebuyer activity in Perth), WA Executive Director of PCA, Sandra Brewer said the challenge now facing the state is to ensure the tax regime does not create affordability challenges as property values grow.
“The disproportionate taxation levied at international investors and new migrants, construction and labour shortages, the end of stamp duty concessions for under-construction apartments, and the looming end of other apartment concessions could exacerbate market pressures,” Ms Brewer argued.
Furthermore, PCA claims that across the Perth metro area, stamp duty repayments equal on average 11 weeks of full-time wages (based on the average household earnings in each suburb).
This figure becomes even more burdensome in inner suburbs like Subiaco, with stamp duty repayments equalling 25 weeks worth of full-time wages (raising $1.1 billion of tax revenue per year alone for the State Government).
“The stimulus measures provided during the pandemic were highly effective, particularly for greenfield development. Reintroducing stamp duty concessions for apartments under construction would go a long way to helping level the playing field and support short-term housing challenges,” Ms Brewer said.
The reality is, however, stimulus programs like Homebuilder can only act as a short-term response to the recession caused by COVID-19. Comprehensive tax reform is needed as a long-term solution to housing affordability.
“As we continue to grow, tax reform will be a vital mechanism that can help more people avoid the rental crunch and gain the keys to their own home,” Ms Brewer concludes.
Speaking of long-term solutions, The Property Tribune has also covered the dangers of price-fixing policies like rent control.
It is argued that rent control remains only as a temporary measure, and should look to be lifted as soon as possible (this article covers why governments should not consider rent control as a long-term policy solution to address housing affordability, despite the best intentions of activists who call for such measures).