The economic impact of stamp duty: Three reform options

Stamp duties have traditionally been a significant revenue earner for state governments, accounting for around a quarter of their own-source taxation revenues (though a rather smaller share of their total funding, given reliance on grants distributions). However, they are also taxes which impose particularly high economic costs. Accordingly, the pursuit of an efficient tax system – coupled with the broader imperative to find sources of productivity gain in the Australian economy – has led to calls for their replacement with more efficient taxes.

Governments are starting to act on this advice, with both the ACT and South Australia moving to reduce or abolish stamp duties on property conveyances as key components of their tax reform agendas. This report assesses the costs of stamp duties to the economy, the potential benefits from their replacement by more efficient taxes, and the revenue impacts on state budgets under certain abolition scenarios. It extends previous analysis in the area of property tax reform by investigating the likely impacts on the property market in both the short and long term, and estimates a more complete measure of the costs of stamp duties by including the inefficiency caused by the impact on transaction volumes.

Download the report below.