Home Duty Trimmed A Little: What Price Good Housekeeping?

The Age

Monday October 30, 2006

TIM COLEBATCH

AFTER seven years in office, the Bracks Government has cut stamp duty on conveyancing for the first time.

That's not surprising. The real surprise is that the cuts are so small.

When Steve Bracks took office in 1999-2000, conveyancing duty raised $1.29 billion. Six years later, the take had more than doubled to $2.67 billion.

To give you some idea, that would pay the running costs of all the primary schools in the state.

Last year revenues from the duty grew by $334 million. Now the Government will hand back $47 million a year, rising to $97 million if and when it decides to scrap its first home buyers grant. That cuts stamp duty by just 1.75 per cent.

The benefits peak for houses worth $400,000 to $500,000, then cut out completely. From January 1, if you buy a house for $500,000, it will cost $2851 more than buying it for $499,999.

This will create interesting air pockets in the market.

It also means that a lot of Victorians - probably including most readers of The Age - will get no benefit when they buy their next home.

The Government says 25 per cent of Victorian houses sell for more than $500,000. The Valuer-General reports that the median price of a house last year was over $500,000 virtually throughout the inner suburbs, the bayside, the inner east, even in suburbs such as Essendon, Fairfield, McKinnon and Templestowe, hardly all toff territory.

House prices have doubled since stamp duty was last cut in 1998.

That's not the Government's fault, but it has clearly pocketed the vast bulk of that windfall.

"Labor believes in targeted assistance to home buyers who need it most," yesterday's policy statement emphasises.

The cuts will not apply to holiday homes or investment properties, either.

And even first-home buyers will benefit only in that their $3000 bonus will be extended, but only until mid-2009.

As tax cuts go, this is austere stuff. It won't be hard for Ted Baillieu to trump it.