by Ericka Pingol
Former Productivity Commission chairman Peter Harris has urged the government to dump the stamp duties for a better substitute.
Harris said it would be much better if the government adopted key recommendations in the “Shifting The Dial” report, which the Productivity Commission released in 2017.
According to the report, “stamp duties would add over $50,000 to the (cost) of a median-priced house in Sydney, penalising people and businesses that move and discouraging others who want to move. For every dollar raised in stamp duties, the cost to Australians in reduced investment and mobility is 70 cents.”
Harris, who served between 2012 and 2018, said that land taxes would be a better alternative. He said that such a change would increase productivity and promote economic growth.
“Those reforms in particular would be replacing stamp duty over time with a land tax. It’s a much more stable form of revenue with a much broader base than just housing sales. It would take a 10- to 20-year transition but the federal government could make a revenue guarantee by effectively borrowing on their behalf as they shift from stamp duty to land tax, which would provide stability in their revenue base. Ratings agencies would completely understand the transfer and wouldn’t treat this as unproductive debt,” Harris told The Australian.