Revenue earned from property taxes has been pouring into the coffers of state and local governments, with the latest Australian Bureau of Statistics (ABS) data indicating that state and local governments nationally collected $49.567bn (51.9%) of their total taxation revenue from property.

Stamp duty on conveyances accounted for the largest overall proportion of property tax revenue, according to the latest CoreLogic Property Pulse report, which analysed the ABS data. Over the 2015-2016 financial year, state and local governments raised $20.607bn in revenue from stamp duty, accounting for 41.6% of total property tax revenue.

According to Cameron Kusher, research analyst at CoreLogic, over the past few years, there has been a significant increase in the value of revenue derived from stamp duty.

“It is pretty easy to see what booming housing markets do for state government coffers with the NSW and Vic governments seeing stamp duty revenues surge. Of course, when the housing market isn’t booming it has a substantial impact on stamp duty revenue, see NSW and Vic in 2008-09 and WA more recently,” Kusher said. 

Despite the recent windfalls, Kusher said the uncertainty surrounding stamp duty, and its dependence on stock turnover, makes it a volatile source of taxation revenue. “Because stamp duty is only collected from properties which transact, the state governments are relying on values and transactions rising across the 5% to 7% of properties which turnover in any given year to drive their major source of property tax revenue,” he said.

CoreLogic further noted that the three biggest sources of property tax revenue—land tax, municipal rates, and stamp duties on conveyances—accounted for 90.3% of all property-related tax revenue to state and local governments in 2015-2016, and 46.9% of total taxation revenue.

“We already know that $20.607 billion in tax revenue came from stamp duty on conveyances, a further $7.237 billion came from land taxes and $16.924 billion came from municipal rates,” said Kusher.  “Land taxes and municipal rates are much more guaranteed income streams than the more volatile stamp duty on conveyances. For this reason, it would make sense to move from stamp duty to a much more efficient, easier to collect and holistic land tax.”

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