State Budget should encourage activity in WA property market

On Thursday, Treasurer, the Hon Ben Wyatt MLA and the McGowan Government will hand down its first State Budget for 2017-18, with the aim of introducing measures that will help bring the Budget back to surplus.

It’s no secret the State’s fiscal position is challenging, and the McGowan Government has been frank in their statements that every West Australian has a role to play in fixing WA’s financial position.

While we appreciate everyone needs to play their part, no one industry should be targeted. Property is vital to the lives of all West Australians and significantly contributes to state finances already. The State Government should be introducing measures that encourage activity in this Budget, not stymieing it with disproportionately high taxes.

REIWA’s 2017-18 pre-budget submission

A few weeks ago, REIWA released its 2017-18 pre-budget submission, which cautioned the Treasurer against targeting the property sector with increased taxes, instead recommending they introduce incentives for first home buyers of established properties and seniors over the age of 65 to help raise funds for the state.

The aim of REIWA’s recommendations are to stimulate the WA property market and generate revenue to the Government. The slowdown in the resources sector has had a massive impact on the WA economy and property market. We’ve seen sales activity continue to trend downwards, with transactions approximately half of what they were a decade ago. That’s a lot of lost transfer duty revenue for the Government.

REIWA analysis shows if the Government were to reintroduce a $3,000 grant for first home buyers of established properties, this would result in a net increase in transfer duty revenue of approximately $19.5 million over one year from increased transactions in the established housing market.

In its submission, REIWA also urges the McGowan Government not to increase transfer duty rates or change thresholds, to make no further changes to rates or thresholds for land tax, and to undertake a state tax review.

Current state taxes, in particular transfer duty, are a hindrance to buyers moving within the property market. We firmly believe there are more effective ways of generating revenue for the Government than simply slogging WA home buyers and owners with inefficient and expensive taxes.

Whilst wholesale tax reform is difficult and not practical now, the conversation should be had with the public about how to reform taxes, and the Government should undertake a state tax review to further the debate.

Whatever the outcome is on Thursday, REIWA looks forward to continuing to work with the McGowan Government to help restore the Budget back to surplus.