Outdated tax brackets from 1986 are keeping Sydneysiders out of the property mar

West

Outdated tax brackets from 1986 are keeping Sydneysiders out of the property markets

http://www.dailytelegraph.com.au ... 0cx12-1226766321046

Politicians, industry figures and academics are calling on the NSW government to reduce rates or overhaul the tax, after $198 million in stamp duty collections brought the state budget into surplus.

"The property market has come to the rescue of the government, so the government needs to return the favour," said Tim McKibbin, chief executive officer, REINSW.

In 1986, the maximum stamp duty rate of 2.5 per cent was increased to 4.5 per cent on properties over $300,000 and 5.5 per cent on those over $1 million.

At the time, the median price of a Sydney house was $98,325, less than five times the average yearly wage of $22,000. A $300,000 property was equivalent to a $2 million property today. A $1 million home was considered extreme luxury, so the top brackets did not affect many people.

Today's Sydney median is $685,000, according to last week's sales reported to RP Data, more than nine times the average wage of $72,000. For $300,000, a buyer can get a unit, or house on Sydney's far outskirts. A $1 million home may be between five and 20kms from the CBD, or further out in some cases.

"The 'bracket creep' phenomenon has increased stamp duty spectacularly over the years," said Robert Carling, senior fellow, The Centre for Independent Studies. "Stamp duty on an average house now is about $25,000, which is 3.8 per cent. In the mid-1980s, the stamp duty on a median house of under $100,000 was $2,000, or 2 per cent. We've seen a doubling on the effective rate because the government has never adjusted the scales."