New housing is one of the most heavily taxed sectors of the Australian economy and its hurting the building industry as well as consumers, according to a new report from Centre for International Economics (CIE).
Independent research by the CIE was commissioned by the HIA, which says the result highlights the ‘magnitude and negative economic impact of the high taxation on new housing’.
Some of the key findings of the CIE's report include that:
- new housing is one of the most heavily taxed sectors of the Australian economy in both aggregate and relative terms;
- the majority of taxes, particularly state taxes, on housing are highly inefficient;
- the taxation burden on new housing falls largely on home buyers; and
- some housing taxes, such as stamp duty, are major impediments to labour mobility and productivity.
The research by the CIE represents the most detailed study of the taxation of Australian housing undertaken for many years. The HIA says the high taxation burden on new housing is a primary cause of excessive building costs, low home building levels, a large and growing undersupply of housing, and resultant affordability problems.
The CIE report also highlights that policy action to remove or significantly reduce these taxes will pay big dividends in terms of improved efficiency, faster growth and increased housing supply.
"It's time to recognise and act on the fact that the tax burden on new housing in Australia is excessive," said HIA managing director Shane Goodwin.
Goodwin said the Tax Forum presents an opportunity for the Gillard Government to put in place the foundation for a strong taxation reform agenda that will not only boost productivity and growth, but can help address policy issues such as Australia's large and growing housing affordability problem.
"We've got to the point where the tax on a median new Sydney home is over $260,000 and it's clear the type of impact this is having in terms of decreased affordability and constrained housing supply," added Goodwin.
A copy of HIA's Submission to the Tax Forum can be downloaded at: http://hia.com.au/taxreform