Report reveals major economic gain from stamp duty removal
An industry report reveals major economic efficiencies can be gained from abolishing insurance stamp duty.
The Access Economics report commissioned by the Finance Industry Council of Australia (FICA) reveals that the abolition of stamp duties could deliver economic welfare benefits of between 1.1% and 1.8%.
“This is the equivalent of gains to household consumption of between $6-10 billion, making state stamp duty reform a major microeconomic reform initiative,” FICA spokesman David Bell – who is CEO of the Australian Bankers Association – said.
Alex Sanchez, GM Economics and Taxation Directorate at the Insurance Council of Australia, says the report shows the need to put state tax reform on the government agenda.
“Insurance stamp duties remain one of the most inefficient state taxes. The evidence is clear on that,” Mr Sanchez said.
“State tax reform can deliver major efficiency gains for the economy. Governments need to look not only at the cost of their bottom lines but also at the costs of efficiency and by removing these deadweight costs, what this means for growth and improved living standards.”
The report, Analysis of State Tax Reform, says the removal of all stamp duties would cost states $15.2 billion in revenue, with property and insurance stamp duties making up $13.2 billion of that cost.
The report states that an inefficient tax in “stamp duties is to be replaced by a more efficient tax [meaning] that the reforms will lead to a boost to economic activity which, in turn, provides a ‘revenue dividend’ to both the Commonwealth and the states”.
It follows an earlier review by the NSW Independent Pricing and Regulatory Tribunal that recommends cuts to insurance stamp duty.
The Access Economics report commissioned by the Finance Industry Council of Australia (FICA) reveals that the abolition of stamp duties could deliver economic welfare benefits of between 1.1% and 1.8%.
“This is the equivalent of gains to household consumption of between $6-10 billion, making state stamp duty reform a major microeconomic reform initiative,” FICA spokesman David Bell – who is CEO of the Australian Bankers Association – said.
Alex Sanchez, GM Economics and Taxation Directorate at the Insurance Council of Australia, says the report shows the need to put state tax reform on the government agenda.
“Insurance stamp duties remain one of the most inefficient state taxes. The evidence is clear on that,” Mr Sanchez said.
“State tax reform can deliver major efficiency gains for the economy. Governments need to look not only at the cost of their bottom lines but also at the costs of efficiency and by removing these deadweight costs, what this means for growth and improved living standards.”
The report, Analysis of State Tax Reform, says the removal of all stamp duties would cost states $15.2 billion in revenue, with property and insurance stamp duties making up $13.2 billion of that cost.
The report states that an inefficient tax in “stamp duties is to be replaced by a more efficient tax [meaning] that the reforms will lead to a boost to economic activity which, in turn, provides a ‘revenue dividend’ to both the Commonwealth and the states”.
It follows an earlier review by the NSW Independent Pricing and Regulatory Tribunal that recommends cuts to insurance stamp duty.