The residential building industry is being weighed down by excessive and inefficient taxation, with taxes now adding more than $250,000 to the price of a new home in Sydney, the Housing Industry Association calculates.
Infrastructure charges, GST and stamp duty add $140,000 to the cost of a new home in Sydney, while other taxes, levies, fees, rates and duties take the total tax grab to over 40 per cent of a new house and land package, HIA says.
“Taxes on new housing are a brake on economic activity, and represent a constraint on housing affordability and labour productivity,” HIA spokesman Graham Wolfe says.
Stamp duty was identified as the most inefficient tax in Australia, discouraging relocation and preventing the economy and communities from extracting best use out of available housing stock.
New analysis shows average stamp duty costs have risen between 527 per cent and 795 per cent across the states and territories in the past two decades.
The cost of stamp duty over the life of an average mortgage is $61,542 in Sydney and $56,616 in Melbourne, according to ACIL Allen Consulting research commissioned by the Property Council.
Other taxes on new homes, including developer infrastructure levies, can be over $70,000 on a new house and land package, while GST is levied on new homes but not existing properties. This adds tens of thousands of dollars to the price of a new home and creates a price differential between new and existing residential properties.
GST on infrastructure levies alone can add more than $5,000 to the final cost of a new home, while stamp duty on the GST adds around $3,000.
Residential building contributes 13 per cent of all GST collected by the government.