Stephanie Anderson April 10, 2012
The ACT government has been asked to take on losses of almost $50 million to help boost Canberra's building industry.
The Housing Industry Association is calling for stamp duty to be abolished on new homes to prevent the predicted 30 per cent drop in residential construction projects this year.
In its submission to the ACT budget 2012-13, HIA ACT executive Neil Evans said the predicted cost to the government would be $49.2 million but the cuts would allow the industry to ''keep pace with demand and not lose ground''.
''Stamp duty on residential property is one of the most inefficient of all taxes,'' he stated. ''As a tax on transactions, stamp duties result in considerable deadweight losses while also acting to restrict labour mobility and cause an inefficient use of dwelling supply.''
The proposal comes after a 28.6 per cent drop in the number of residential construction projects in the ACT throughout 2011.
The association said the government could recoup around $20.6 million in stamp duty revenue as buyers sold off existing houses and upgraded as new properties came on the market.
The submission also stated that the government could potentially recover around $19 million in additional GST revenue.
''This means that the net cost of the measure to the ACT government could be less than $10 million,'' Mr Evans said.
''The supplementary economic activity within the ACT economy as a consequence of the additional new home building is estimated to be around $247.7 million.''
However, ACT Treasurer Andrew Barr said some of the costings in the HIA submission needed more scrutiny. He said while there was room for tax reform, stamp duty would not be abolished within the capital.
''It isn't going to happen in this coming budget, I can rule that out,'' he said. ''We are looking at some of the ideas they put forward … There are certainly some measures that can be taken in this budget as part of a tax reform.''
The abolishment of stamp duty has also been proposed by the ACT division of the Property Council of Australia.
In its submission to the ACT budget 2012-13, the council stated that stamp duty was diverting investment from the ACT, dampening economic activity and growth, and lowering superannuation returns for Australians with ACT property investments.
The council also called for the lease variation charge to be abolished. It described the charge as ''arbitrary, complex, inefficient and inequitable''.