The majority of experts agree that stamp duty could soon be on its way out as the government grapples with the post-COVID economy, according to comparison site Finder.
In this month’s Finder RBA Cash Rate Survey, 43 experts and economists weighed in on future cash rate moves and other issues related to the state of the Australian economy.
While all 43 experts surveyed expect a cash rate hold in June, more than two-thirds who weighed in on stamp duty (six per cent or 24 out of 35) predict that it will be axed within the next 18 months, with most (21) expecting the change in 2021.
Policymakers have been calling for an overhaul of taxes to help boost the post-COVID economy, with stamp duty emerging as the most ripe for reform.
Graham Cooke, insights manager at Finder, said stamp duty heavily penalises families who are required to move regularly for work, as well as those who are trying to get onto the property ladder.
“Stamp duty makes the process of buying a home even harder,” Mr Cooke reflected.
“Not only do borrowers have to save a 20 per cent deposit, they also need to save well over $10,000 – in some cases more than $80,000 – for a tax that generally cannot be included in your mortgage.
“It’s like an on-the-spot fine for home buyers.
“Putting this tax burden all up front holds back purchases and dissuades buyers from purchasing frequently,” Mr Cooke said.
Not only do economists think stamp duty will be axed, four in five also think the tax should be abolished or replaced with a land tax.
Mr Cooke said eliminating stamp duty or replacing it with an ongoing land tax could be a great way to stimulate the market.
“As a borrower, investing that $10k-$80k in the value of your home rather than immediately losing it to the government will be a huge benefit,” he said.
When do you expect the economy to recover?
More than four-fifths of experts (29 out of 34, or 85 per cent) say the economy won’t fully recover until at least 2022.
More than one-third of experts (37 per cent or 14 out of 38) expect Australia to have its first quarter of GDP growth in Q3 2020.
Applied macroeconomist at Monash University, Mark Crosby, said Q3 GDP growth is more about how bad the preceding quarters have been.
“If growth in Q3 2020 was measured against any quarter in 2019 it would be negative.
“In other words it’s growth but nowhere near a reversion towards the trend in Q3, not the end of recession (other than in definition) and not the end of rising unemployment,” Mr Crosby said.
Restaurants and bars won’t return to normal until 2021
Those anxious for a “normal” restaurant experience once restrictions ease may also be waiting longer than they think.
Nearly half (47 per cent or 15 out of 31) of the experts who weighed in on hospitality said restaurants and bars won’t be operating at full capacity and without social distancing restrictions until 2021.
Less than a third (10 or 31 per cent) expected to see this happening this year.
Mr Cooke said while restrictions are beginning to be relaxed, Australia still has a way to go until things return to normal.
“While restrictions are beginning to ease, it’s clear we’re still a long way off booking a big group table at the pub over the long weekend,” Mr Cooke said.
