Victoria’s deputy premier has recognised stamp duty is a major barrier for first home buyers to enter the market as the state considers reforming the controversial tax.
The state government sent the strongest signal yet that it is open to major stamp duty reform, including the introduction of a broad-based land tax, on March 21.
It comes a month after Treasurer Tim Pallas warned Victoria’s budget bottom line would take a $30 billion (US$19.6 billion) hit if stamp duty was scrapped.
Deputy Premier Ben Carroll on March 22 said the backflip was due to competitive property market conditions keeping many Victorians out of home ownership.
“I want to get options, and you have to add stamp duty into your price and when you’re bidding,” he told reporters.
“I think particularly for first time buyers, stamp duty is really hard, because it’s almost a double whammy.”
Mr. Carroll said the state government had been presented with new evidence that supported the feasibility of stamp duty being scrapped.
“I think what’s changed is the parliament has now received a new report on stamp duty,” he said.
“We have received reports most of the year and we will, in principle, agree to many of the recommendations.
“I will leave that policy particularly to the treasurer, except to say obviously the treasurer is always looking at options.”
Housing Minister Harriet Shing said the government was always looking for ways to help people enter the market.
“Stamp duty distorts behaviour in the way in which it is reflected in buyer choice,” she said.
“(Housing reform) is the aggregate of this work that will continue to provide relief to people who do want to get into the housing market.”
Opposition Leader John Pesutto was not confident in the state government following through on any hints of reforming stamp duty.
“They have never signalled any serious intention to engage in tax reform,” he said on March 22.
“We need to look at the inefficiencies around stamp duty, we need to look at affordability, getting the cost of living down a lot.”
But Mr. Pesutto refused to detail what stamp duty reforms he would implement if in government.
Opposition housing affordability spokesman Evan Mulholland said the government’s signals were a “cruel hoax on buyers”.
“It was exactly a month ago that Jacinta Allan came out and said stamp duty reform was not going to be part of the budget process for the upcoming May budget,” he said.
“And now we’re seriously expected to believe that Labor would go and reform stamp duty, they’re not. Labor can’t be trusted to deliver it.”
In 2023, a parliamentary inquiry urged the Victorian government to look into scrapping stamp duty and replacing it with a broad-based land tax.
The government released its response on March 21, which stated it now “considers Victoria’s taxation mix to balance many priorities and looks for opportunities for reform where possible.”
The government introduced a bill on March 20 to abolish stamp duty on commercial and industrial properties.
Instead, first buyers can pay the property’s final stamp duty up front or make annual payments across 10 years equal to stamp duty and interest.
Meanwhile, Victoria joined forces with NSW and Queensland to demand a major overhaul of the annual GST carve-up, with the three most populous states calling for four-year forecasts to help secure their budget bottom lines.
NSW and Queensland led criticism of the $89 billion (US$58 billion) allocation for 2024/25 as they will lose hundreds of millions of dollars while the shares surge ahead for other states and territories.
Victorian Premier Jacinta Allan backed the four-year proposal and urged the commission to provide more certainty to state governments instead of just “bouncing from one year to the next.”
The state’s net debt was forecast to climb to $177.8 billion (US$155.9 billion) by June 2027 in a budget update released in December—about $6.4 billion (US$4.2 billion) higher than the forecast in May.
The Victorian Budget will be handed down on May 7.
