Late last year, the NSW Government announced brave changes to the state’s tax system that would offer owner-occupiers an alternative to stamp duty via a fixed $500 up-front fee plus an annual tax of 0.3% on unimproved land value.
Under these changes, the buyer of an average Sydney house would have the choice to pay either a $51,000 lump sum (the current stamp duty requirement) or around $2,000 each year.
However, once a property is subject to that annual tax, all future owners would be required to continue paying it.
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In announcing the reforms, NSW Treasurer Dominic Perrottet proclaimed that stamp duty is Australia’s “worst tax” and claimed that the reforms would boost efficiency and equity.
Indeed, Victoria University recently ranked stamp duty as the most inefficient tax:
As did Treasury’s discussion paper on tax:
At the other end of the efficiency spectrum is land taxes, which are highly efficient, as illustrated above.
Now there are calls to abandon these reforms from none other than Dr Andrew Wilson of My Housing Market:
“State governments rely on property tax, this year will be a big year so why would you change it?” Andrew Wilson of My Housing Market said.
Thankfully, Treasurer Dominic Perrottet hit back, taking a long-term view:
“Stamp duty is an impediment to purchase, it’s by far our country’s worst tax”…
“If you are aged between 30 and 45… there is nobody out there standing up for you, there is no lobby group.”
Any worthwhile reform involves short-term pain for long-term gain.
You have to commend Dominic Perrottet for taking the high road.