Allan government considering scrapping stamp duty

If the state government scrapped stamp duty, 100,000 people would enter the Victorian housing market, according to the Real Estate Institute of Victoria.

If the state government removed stamp duty, 100,000 people would enter the Victorian housing market, according to the peak real estate body.

Real Estate Institute of Victoria president Jacob Caine has welcomed flagged changes to the deeply unpopular tax, saying it will help to fix the state’s housing crisis.

Senior government sources this week told the Herald Sun major stamp duty reform was now very firmly “on the table”, just a month after Treasurer Tim Pallas ruled it out.

Mr Caine said in any given year, the “super ineffective tax” caused around $5bn in negative economic activity that prevented people from buying property.

“It’s a tax instrument that is stymieing our existing stock of homes and when you are in potentially the most acute housing crisis in the state’s history, that’s really unacceptable,” he said.

“If you removed it today, literally 100,000 people would come into the market.”

“The reality is every time we misuse an existing property we are making it much harder for people to enter the market.”

Urban Development Institute of Australia Victoria chief executive Linda Allison said she welcomed reports the government is considering reform.

“UDIA Victoria has consistently called for major property tax reform, with stamp duty reform decades overdue,” she said.

Victoria’s deputy premier Ben Carroll on Friday conceded it is obvious that stamp duty poses a significant hurdle for first home buyers, adding the government is always looking for ways to make housing more affordable.

“You don’t have to be the treasurer or a local member or a minister to know that stamp duty is a disincentive for people, particularly first home buyers, purchasing a home,” he said.

But Mr Carroll remained tight-lipped as to the government’s plans, but acknowledged there was an appetite for change.

“I will leave that policy to the treasurer, except to say the treasurer is always looking at options to make housing more affordable,” he said.

Opposition home ownership spokesman Evan Mulholland said the government’s suggestion that it was looking at scrapping stamp duty a “cruel hoax” on first home buyers.

“If Tim Pallas says that it’s going to blow a $30 billion hole in the budget, I call for him to release that modelling,” he said.

“It’s the kite they seem to be flying today but they’ve never signalled any serious intentions.”

Asked whether the Coalition would reform stamp duty if elected in 2026, Opposition Leader John Pesutto said “everything is on the table”.

The Department of Treasury and Finance last year revealed stamp duty now accounts for 34 per cent of the state’s total taxation revenue.

A parliamentary inquiry this year found that stamp duty “distorts behaviour” in the housing market and discouraged people from moving house or downsizing.

Earlier: Allan gov mulls scrapping stamp duty

Victoria’s deputy premier says its obvious stamp duty is a hurdle for first home buyers, adding the government is always looking for ways to make housing more affordable.

The comments from Ben Carroll come as the Allan government moves to explore scrapping residential stamp duty in a bold bid to address a worsening housing supply crisis.

Mr Carroll on Friday noted stamp duty wasn’t helping to alleviate the state’s housing crisis.

“You don’t have to be the treasurer or a local member or a minister to know that stamp duty is a disincentive for people, particularly first home buyers, purchasing a home,” he said on Friday.

Mr Carroll remained tight-lipped as to the government’s plans but acknowledged there was an appetite for change.

“What’s changed is the parliament has now received a report on stamp duty and obviously the Treasurer also made some landmark reform around commercial stamp duty,” he said.

“I will leave that policy to the treasurer, except to say the treasurer is always looking at options to make housing more affordable.”

Victorian Deputy Premier Ben Carroll. Picture: Andrew Henshaw

Senior government sources have told the Herald Sun major stamp duty reform was now very firmly “on the table”, just a month after Treasurer Tim Pallas ruled it out.

Mr Pallas said scrapping stamp duty would plunge the state a further $30bn into debt and result in funding cuts to health and education.

However the government on Thursday said it supported a recommendation from a parliamentary committee probing land transfer taxes to explore state-based reform options including abolishing stamp duty.

“We know stamp duty can be a barrier to buying your first home, moving house or downsizing – and that puts pressure on housing affordability,” a government spokesperson said.

“We’ve delivered exemptions and concessions for Victorians who need them most, but we’re always looking at what more we can do to increase housing options across the state.

“Our landmark move this week to reform Commercial and Industrial Property Tax shows we’re serious about making tax fair for hardworking Victorians – and we are constantly looking at how we can make improvements to our tax settings.”

Treasurer Tim Pallas said last month stamp duty would not be scrapped. Picture: Luis Enrique Ascui

A government spokesperson says stamp duty can be a barrier to buying your first home, moving house or downsizing. Picture: iStock

The opposition on Friday labelled the Allan government’s suggestion that it was looking at scrapping stamp duty a “cruel hoax” on first home buyers.

Shadow Minister for Home Ownership Evan Mulholland said the government couldn’t be trusted to deliver the reform.

“It’s just not fair, it’s a cruel hoax on homebuyers,” he said.

“If Tim Pallas says that it’s going to blow a $30bn hole in the budget, I call for him to release that modelling.

“It’s the kite they seem to be flying today but they’ve never signalled any serious intentions,” he said.

Opposition Leader John Pesutto on Friday doubted any reform would go ahead, saying the Labor government was “addicted to taxes”.

“It’s the a cop they seem to be flying today but they’ve never signalled any serious intentions,” he said.

“When Jacinta Allan and Tim Pallas say they’re thinking about tax reform, make no mistake, it will lead to higher taxes.”

Pressed on whether the Coalition would commit to reforming stamp duty, Mr Pesutto said “everything is on the table”.

Allan government sources say major stamp duty reform now very firmly ‘on the table’. Picture: Luis Enrique Ascui

The government has faced repeated calls to switch from stamp duty to a broad based land tax as part of a broader tax reform package.

The Department of Treasury and Finance last year revealed stamp duty now accounts for 34 per cent of the state’s total taxation revenue.

The Legislative Council’s Economy and Infrastructure Committee Inquiry found that stamp duty “distorts behaviour” in the housing market and discouraged people from moving house or downsizing.

It also found the tax disadvantaged first-homebuyers and limited the efficient allocation of housing stock.

Property Council of Australia Victorian executive director, Cath Evans, said tax barriers to Victorians purchasing their own home remained a serious contributing factor to the ongoing housing affordability crisis.

“Stamp duty acts as a massive wet blanket on property transactions in this State and impedes economic activity – locking people into unsuitable housing,” she said.

“With land transfer duty fees accounting for 27 per cent of Victoria’s own tax revenue, it also leaves the State’s finances precariously dependent on income subject to property market fluctuations.”

The Property Council has proposed expanding off-the-plan stamp duty concessions on apartments to include all buyers.

“This would be coupled with a ‘rightsizing’ initiative to reduce the burden of stamp duty on older Victorians who wish to sell their family home and move into more appropriate accommodation – assisting their transition and freeing up larger homes for younger families,” she said.

Industry sources said the government had become over reliant on the restrictive property tax.

“The Government’s inability to commit to desperately needed tax reform is 100% due to their absolute reliance on Stamp Duty to service their massive debt,” one property expert said.