A two-year stamp duty holiday would fix the housing crisis

39 mins ago – 1.48PMLetters | August 2Readers’ letters on Australia’s housing crisis, tax reform, mining, Liberal Party climate policy and the CFMEU royal commission.Axe stamp duty to free up housing supplyI had some thoughts about your article “Stamp duty rates are wrong, analysts say. Downsizers agree”, which highlights one of the biggest inefficiencies in Australia’s housing market.Older Australians are reluctant to shift into smaller places because of hefty government levies. A temporary pause could rapidly improve supply. David RoweOur sales network regularly speaks to empty-nesters who would happily move to smaller homes but can’t justify paying substantial stamp duty.This is far from a new issue. The Financial Review highlighted it almost a decade ago in “Angus Raine calls for stamp duty break to encourage empty-nesters to downsize”. Then, I argued that stamp duty relief for downsizers aged over 70 would encourage housing turnover and improve affordability. Nearly a decade later, the case is even stronger.I respect that state governments worry about the revenue hit. However, using a carrot rather than a stick could encourage downsizers to move. So, if permanent concessions are deemed too costly, the states could trial a two-year stamp duty holiday. It would set a clear deadline for downsizers to act without permanently draining state budgets.We’ve also seen temporary policy incentives work before. In 2007, the Howard government allowed older Australians to contribute up to $1 million in after-tax savings to superannuation before new rules were applied. This measure prompted many downsizers to act.My family of seven benefited when the previous empty-nester owners of our home downsized to a nearby two-bedroom duplex. Their decision to leave a five-bedroom house that was surplus to their needs freed up a much-needed family home.More well-designed economic incentives like this would encourage downsizers, improve housing supply and help ease the affordability crisis.Angus Raine, Raine & Horne Group executive chairman, Sydney, NSWDensity caps will save our suburbsWhen it comes to building more housing in Sydney (“Labor threatens Sydney councils as cost to build an apartment hits $1m”), what is being overlooked is that you can only pack so many people into a suburb, before you ruin it – irreversibly. Infrastructure becomes overwhelmed. Traffic, parking and access to amenities become a nightmare.One simple solution might be population density caps. It starts with looking at how many people can be reasonably accommodated within a suburb. As a conservative starting point, let’s say 8000 people per square kilometre, which can vary from suburb to suburb. Once the cap is reached, any further housing would need to be population-density neutral. That way, we can preserve what is good about our suburbs – the things that made people want to live there in the first place.Terence Ozorio, Bondi Beach, NSWEnd idle wealth, tax big fortunesCathal Leslie’s complaint regarding the decline of “technical competence” among economists and growing support for wealth taxes (“Why are economists backing the worst ideas such as wealth taxes?”) misses the fact that the serious orthodoxy he defends is largely responsible for our economy’s present stagnation.However, he is absolutely correct that adopting a land value tax is a necessary reform to revitalise innovation and reduce unproductive financial speculation.But land value taxation alone is not enough. The accumulation of huge fortunes has created a class of idle wealth that operates as a drag on market dynamism, sucking vitality out of the real economy. Too much credit flows into financial gambling rather than productive investment, and a wealth tax on assets over $50 million would unlock real value.As for Leslie’s objection that wealth valuations are too complex for a wealth tax to work, that problem is already solved by insurance companies that price complex and illiquid assets every day.Alex White, Brunswick, VicThe key to real tax reformRegarding the article “Time is over for tinkering with how we divide the GST pie”, I couldn’t agree more. We should move to a consumption base in two stages. Stage one would increase to 12.5 per cent and stage two, after three years, would move to 15 per cent.Correspondingly, income tax scales should be updated to a tax-free threshold of $25,000, flat tax of 25 per cent for everyone up to $350,000 and 30 per cent after that.Then, CGT would go back to the 50 per cent discount, negative gearing would remain, trusts would go back to where they were and company tax would stay the same.This would remove the need for high-income earners to game the system by using companies and trusts as tax shelters and will greatly simplify the system.Everyone would win: high-income earners would look to benefit the most, but they spend more, so they pay more GST. The government would make more revenue, and it would put more money into the hands of all income earners. This, in turn, would drive economic growth and fund social programmes (maybe even a sensible NDIS).David Storm, Woonona, NSWLaws, not political access, govern miningWhile The Australian Financial Review article “The new billionaire playbook: Half of all wealth is now self-made” may be sourced from The Economist, it is insulting and inaccurate to claim that wealth from raw materials “often depend[s] on political access” and in particular, make the ludicrous statement that “It is hard to open a mine … without friends in the government”.In Australia, mining is the most heavily regulated sector of business activity in the country, with assessment and approvals rigorously governed by a raft of legislation at state and federal levels.Opening a mine in Australia is a highly capital-intensive exercise and only happens after lengthy and intense pre-feasibility and feasibility studies covering engineering, economics, environment, community and a range of other areas.Only then does a project enter state and federal approval processes – with the outcome depending not on “friends in the government”, but the ability of projects and companies to comply with laws developed over many decades to encourage mining investment while protecting our precious environment.Even then, success is not guaranteed, with returns dependent on controlling costs while being a price-taker in international commodity markets.Tania Constable, Minerals Council of Australia CEO, Sydney, NSWLiberals must reset on climateSimilar to Labor’s reset of policy in Victoria, is it not time for the Liberal Party to rejig a more tolerant climate change policy?It should, at least, listen to the scientific research and the concerns of many to keep a boundary between science and politics.The Liberals’ decline, among young people in particular, is the outright rejection of climate change.Malcolm Cameron, Camberwell, VicLaws, not inquiries, will fix unionsThere have been two royal commissions (“CFMEU royal commission must go deep to cut out corruption cancer”) into the building industry and one royal commission into corruption in trade unions in the past 35 years.First, the Gyles royal commission ( NSW), second the Cole royal commission (Cth) and third the Heydon royal commission (Cth).Ultimately, what needs to change is government determination (state and federal) to enact effective laws to address illegal conduct (whether criminal or civil in nature) and federal/state agencies empowered to thoroughly investigate misconduct and institute appropriate civil/criminal actions.John Chambers, Campbelltown, NSW