Putland Uncensored
Letters — including some that didn't get past the Editor
Friday, January 25, 2008:
Rationalizing stamp duty
It is appropriate that the surge in Melbourne home prices has rekindled debate on conveyancing stamp duty, but not at all appropriate that the discussion has focused on the size of the duty instead of its base.
Stamp duty is a transfer tax on the total value of a property including the building(s) and the land. By taxing buildings, the duty deters construction and thus reduces the supply of housing. And by separately taxing every transfer in the supply chain, it impedes the process of bringing new homes to market (and discriminates against owners who need to move frequently).
The solution is to apportion the duty to the increase in the land value since the last transfer of title. Under this arrangement, buildings are not taxed, and each transfer does not create a new tax liability, but merely realizes an already accumulated liability (and the discrimination against frequent movers is eliminated).
[Submitted to the Melbourne Herald Sun, Jan.25, 2008. Published without the last sentence, under the heading "Duty to supply housing", Jan.28, 2008. See also Neutralizing stamp duty and development levies.]
