Morrison Government must help states with tax reform

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The NSW Government’s 2021-22 budget papers forecast it will net $41.6 billion in property stamp duties in the forward estimates to 2024-25.

But economists told The AFR that NSW will not be able to match the money it is tipped to make from stamp duties over the next four years if it proceeds with its plan to replace it with an annual land tax, with the government planning to give buyers the option to switch to land tax when they make a purchase, thus locking that piece of land in permanently to the annual tax:

  • Stamp duty is projected to become the state’s biggest source of revenue.
  • Treasurer Dominic Perrottet has played down the chances of introducing the reform ahead of the next state election in 2023.
  • Some projections indicate it would take the government nearly 50 years to recover an annual levy for some properties.

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About the author
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.