Stamp duty costs more than it raises in revenue

The Menzies Research Centre (MRC) commissioned Tom Hird to write a report examining the economic costs of  residential stamp duty.  Tom's findings were delivered to the MRC's June 2007 State Policy Conference and were widely reported in the nation's press.  Stamp duty on the median house transaction more than doubling, and even quadrupling, in capital cities since 2000 (to between $15,000 and $19,000).  An important conclusion was that stamp duty so distorts the allocation of housing that, at the margin, every dollar of stamp duty revenue imposes over $2 in welfare losses on the community.  Tom also concluded that these costs would be magnified in the future as stamp duty impedes the significant reallocation of housing stock that is required given Australia's rapidly ageing population.