A proposed increase to the GST on new housing will reduce affordability and cost jobs, the Housing Industry Association (HIA) has warned.
Graham Wolfe, chief executive of industry policy and media at the HIA, said an increase of five per cent on top of the price of a new home will put housing out of reach for many people who are trying desperately to get into the market.
“New housing is already one of the most heavily taxed sectors of the Australian economy, with the tax burden on a new house and land package up to 44 per cent of the final price,” he said.
“Modelling conducted by the housing industry shows that an increase in the GST by another five per cent would add around $30,000 to the price of an indicative house and land package, and over $60,000 over the life of a loan in principal-and-interest repayments.”
“As an industry that is subject to a disproportionately high level of tax – some of which are amongst the most economically inefficient forms of taxation – we welcome a comprehensive tax reform debate,” he said.
Mr Wolfe said Prime Minister Malcolm Turnbull has rightly questioned whether raising the GST to reform taxation elsewhere will provide net positive benefits to the economy.
“Increasing the GST on new housing will cost jobs and reduce housing affordability, putting both firmly on the negative side of the ledger,” he said.
[Related: Govt reveals housing affordability options]