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:
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
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