Queensland’s halving of stamp duty on shares is likely to be another poisonous apple in the fools’ paradise of competitive federalism.It is similar to the abolition of death duties by the ageing Queensland Premier Joh Bjelke-Petersen in the 1970s. Other states felt forced to follow. But the stamp-duty move is likely to spread more quickly. This is because to take advantage of Queensland’s death-duty abolition, you had to pay the price of dying in Queensland _ which meant, of course, that you had to pay the (perhaps greater) price of living there beforehand.Similarly, when the states compete with each other over who can offer the lowest payroll tax, you have to move your workers to that state to take advantage of it.
However, the stamp duty on share transactions is different. Most shares are held electronically and all are transferred electronically. It is easy enough for stockbrokers to set up an agency in Queensland and do all of the transfers there. At present the market turns over $128 billion a year. At the present tax rate of 0.6 per cent, the total stamp duty would be $768 million, less about $155 million lost to overseas transactions. NSW and Victoria raise about $250 million each. The ACT gets $12 million. Leaving $100 million shared by the rest. Queensland is likely to take a very hefty slice of the NSW and Victoria share. Initially, it may find that by reducing the duty from 0.6 per cent to 0.3 per cent, it will pick up more than enough extra volume of transactions to make up for the loss in percentage taken from each transaction. Unless, the other states fall into line and reduce their tax. If this happens, the usually wealthy shareholders of Australia will gain about $384 million a year at the expense of state revenues which usually go to schools, hospitals and roads.
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