Treasury boss Martin Parkinson has backed a move to abolish real estate stamp duties, saying they are biggest drag on productivity and inhibit economic adjustment.

Dr Parkinson has told a forum in Canberra state that housing taxes inhibited economic adjustments, whether it be workers moving to take on new jobs or companies looking to restructure their businesses.

The Real Estate Institute of Australia (REIA), the national professional association for the real estate agents in Australia, has welcomed the comments made by the secretary of treasury, that there needs to be a move to abolish state-based real estate stamp duties.

State based stamp duties are inequitable, inefficient and an unstable source of revenue for state governments,” said REIA Acting President, Ms Pamela Bennet.

Stamp duties represent additional costs to property transactions, discouraging turnover of housing and distorting choices between renting and buying and between moving house and renovating,” she continued.

According to REIA, abolition of stamp duties would not only improve mobility but also improve social and economic development.

“The abolition of all state stamp duties and replacement with more efficient taxes will improve household consumption, a measure of economic wellbeing, by around 2 per cent,” said Ms Bennet.