Victoria’s upper house of parliament recently voted to look into whether stamp duty should be scrapped after Liberal Democrats minister David Limbrick moved the motion to establish an inquiry into the ‘worst tax’.

The wide-ranging inquiry will look into the impact of stamp duty on housing supply, labour mobility and the overall efficiency of the tax system, with a report handed down within six months.

Real Estate Institute of Victoria chief executive Quentin Kilian welcomed the “long overdue” announcement of an inquiry, but warned of the risk that the state government could simply replace one tax with another. 

“In its simplest form, stamp duty sees Victorians pay the Government for the privilege of buying a home. It does nothing for participants in property – not investors, nor sellers or renters – and it certainly acts as a deterrent for first homebuyers,” he said. 

“Property sector leaders fear that unless they’re engaged, along with finance experts, in the development of new tax policy for the state, then policymakers are likely to snap to an easy and ill-informed solution of just replacing stamp duty with ongoing land tax, or something even more onerous.”

In particular, Mr Killian drew attention to the NSW state government’s new First Home Buyer Choice scheme which allows some first home buyers to opt-in to an annual land tax rather than pay upfront stamp duty. 

“While the flip from lump sum to longer-term tax relieves immediate pressure of entering the market, it could see households paying more over the long-term depending on how long they choose to stay in their property,” he said. 

Freya Southwell is a property lawyer and principal of Sutton Laurence King Lawyers.

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