Securitisation can hold the key

In this ACFS Financial Policy Brief, Professor Kevin Davis provides a simple solution for State Governments to transition away from reliance on stamp duties towards property taxes – as advocated by the Productivity Commission. It involves abolishing stamp duty and applying property taxes only to those properties on which the last sale did not incur stamp duty, which avoids “double taxation” of home-owners. Securitising future property tax receipts enables the government to avoid the adverse cash flow effect of loss of stamp duty revenue. The securities so created are long term, suitable for superannuation funds and the design of retirement income products, and could (depending on design) provide indirect exposure to the asset class of residential property – facilitating enhanced diversification of investment portfolios.

Download the Financial Policy Brief 

This FPB was prepared by Professor Kevin Davis, Research Director at the Australian Centre for Financial Studies.

The ACFS Financial Policy Brief series provides independent analysis and commentary on current issues in financial regulation, with the objective of promoting constructive dialogue among academics, industry practitioners, policymakers and regulators and contributing to excellence in Australian financial system regulation.

To read more papers in the FPB series, click here.