The Australian Capital Territory's ambitious plan to phase out stamp duty on property purchases is falling behind schedule, a new review has revealed. The review, commissioned by the ACT government, found that the transition to a broad-based land tax is not progressing as quickly as anticipated, raising concerns about the territory's fiscal strategy.
Revenue Shortfall Widens
The review, conducted by the ACT Treasury, indicates that the revenue from stamp duty has not declined at the expected rate. Instead, strong property market activity has kept stamp duty collections high, delaying the intended shift. The original timetable aimed for stamp duty to be phased out over 20 years, but current projections suggest it could take significantly longer.
According to the review, the ACT government collected $536 million in stamp duty in the 2021-22 financial year, well above the projected trajectory. This has led to a growing gap between the revenue from stamp duty and the revenue from land tax, which was meant to replace it.
Impact on Home Buyers
The delay means that home buyers in the ACT will continue to face high upfront costs from stamp duty, which can amount to tens of thousands of dollars. The review warns that this could hinder housing affordability and mobility, as buyers may be locked into properties longer to recoup the cost.
ACT Treasurer Andrew Barr acknowledged the findings, stating, "The transition is taking longer than we initially modelled due to the strength of the property market. We remain committed to the reform, but we need to adjust our expectations."
Government Response
The ACT government has not yet announced any changes to the policy timetable. However, the review recommends a reassessment of the phase-out schedule and consideration of measures to accelerate the transition. Options include increasing the rate of land tax or expanding its base to cover more properties.
The review also notes that the current approach relies heavily on property market conditions, which are unpredictable. A more robust mechanism may be needed to ensure the phase-out stays on track.
Broader Implications
The ACT's stamp duty phase-out is closely watched by other states and territories considering similar reforms. The review's findings could influence policy debates across Australia, particularly as housing affordability remains a key issue.
Critics argue that the delay undermines the credibility of the reform and that the government should consider alternative revenue sources. The review, however, stops short of recommending a complete overhaul, instead urging a cautious but determined approach.
