"Vendor's Tax may go"

News.com 15 February 2005

NSW Treasurer Andrew Refshauge today left open the possibility of changes to the state government's property taxes.

The taxes came into effect at the beginning of the financial year as part of the government's attempt to cool the property market and encourage first homebuyers.

But property groups have said the measures kill off the market altogether.

Dr Refshauge said he was willing to consider other alternatives to the taxes. "I am happy to listen to any ideas that people have," he told reporters.

"I am happy to find better ways of doing it if people can suggest a better way."

The new taxes include the scrapping of the land tax-free threshold of $317,000 and the introduction of a 2.25 per cent vendor duty on all investment sales or second homes.

But Dr Refshauge said critics should keep in mind that the taxes had helped 31,897 first homebuyers, eligible to receive stamp duty concession, into the market in the last nine months.

"These young families are being helped out of the rental property market through our strong and detailed plan to help first home buyers," he said.

"The market if anything has shown a move from investors to first home buyers and I think that has a social benefit."

He dismissed claims the government had burst the housing bubble, saying the property market was still strong.

"The general view at the moment is that the home market has become buoyant again," he said.

"The only concern that people would have in that area would be the possibility of an interest rate rise."

Dr Refshauge conceded the taxes had not generated as much revenue as hoped, but said they were also being used to fund schools, hospitals and police services.

"I think people will see there are benefits through what their taxes are allowing the government to do," he said.

Dr Refshauge said a hike in interest rates would take a toll on the government's coffers.

"If it had an effect on people purchasing property it would certainly have an effect on our revenues," he said.

"Obviously this is an area for the Reserve Bank to make their decision but for anybody paying off a mortgage, they don't want to see interest rates go up."

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