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Tax reform is on the agenda and the property industry has spoken on key issues crippling growth across the sector and what they want to see from tax reform, according to the latest Real Estate & Construction Industry Insights Report from Grant Thornton.
All options are on the table, with 90% of industry participants surveyed supportive of comprehensive tax reform. We also found 77% agreed to a ‘no exceptions’ basis of reform, giving the Government a mandate to do what is needed to improve the current model.
Sian Sinclair, Global Head of Real Estate & Construction for Grant Thornton stated its imperative for the industry to articulate and advocate for the changes desired for the sector as the Government prepares its tax reform review.
“The Real Estate and Construction industry is a heavy lifter when it comes to tax. This means the industry needs to provide Government with clear arguments for a fairer tax system that will improve growth conditions for the sector. Otherwise they won’t get the serious changes required at all levels of Government.
“From our interviews, we’re seeing the majority want stamp duty abolished. Of those opting to abolish stamp duty, the most popular response for a replacement revenue stream to Government was to increase or broaden the GST. While abolition of stamp duty is often on the wish list and historically has been linked to GST, the upcoming review of the federation model means now is the time for the industry to speak up.”
“The preference to pay more GST over stamp duty is quite remarkable, given GST represents a real cost to residential property developers who, unlike many suppliers are price-takers when they sell their product, working backwards on the market price rather than applying an additional 10%,” said Ms Sinclair.”
While most voted for the removal of stamp duty, others indicated they would like to see an overall decrease in the rate of property taxes.
“Stamp duty has been identified as crippling to the industry, with 80% attributing the inefficient tax to housing affordability issues. Sadly almost half (46%) of those we spoke to admitted to not pursuing a project or purchase opportunity because of the stamp duty costs involved, demonstrating the negative impact on transaction activity.
“Tax reform is on the agenda and the statistics in our report show there is a clear mandate for real change. Now is the time to speak up and be heard to ensure inefficient taxes do not continue to impact affordability and stifle the property sector” said Ms Sinclair.
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