NSW proposes axing stamp duty in favour of land tax

^{Photo by Ben Warren on Unsplash}

New South Wales has announced plans to do away with stamp duty in an effort to drive post-COVID recovery.

NSW Treasurer Dominic Perrottet said in his budget speech the government was launching a proposal to give home-buyers the choice to axe stamp duty in favour of a land tax. 

"Today we turn theory into the first firm step, seeking feedback on a proposal to transform our property tax system," Mr Perottet said.

"This proposed model would give buyers a choice to axe stamp duty at the point of purchase and choose an annual property charge instead.

"There would be no impact unless you are purchasing a property and you make the choice to change."

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Mr Perottet said the proposal could generate 75,000 new jobs and add an extra $3,300 of income for every household in NSW.

An annual property tax based off land value would replace stamp duty, and buyers will get the choice of paying the transfer duty or the property tax, with rates differing for owner-occupiers and investors. 

Current stamp duty concessions for first-home buyers would be replaced with a $25,000 grant, with the option to use the money on refurbishing the property. 

"Stamp duty is a relic from a bygone era when you picked one career, started a family, bought a home and basically settled in for life," Mr Perrottet said.

"It adds tens of thousands of dollars to the cost of the biggest financial commitment most people ever make."

Buying a house in Sydney at the median price of $1,154,406 would cost you $48,795 in stamp duty. 

Stamp duty comes under the umbrella of transfer duty, a state government tax, which the NSW government forecasted will make them 7.926 billion in revenue in 2020/21. 

NSW also announced in July first-home buyers would see thresholds raised for stamp duty, from $650,000 to $800,000 for new homes, and from $350,000 to $400,000 for vacant land. 

$29 billion to ensure economic recovery 

In addition to stamp duty changes, Mr Perrottet announced sweeping changes to payroll tax. 

The threshold is set to be raised from $1 million to $1.2 million and the rate will be dropped to 4.85% for two years, while companies who create 30 new jobs in NSW will have payroll tax scrapped. 

Smaller businesses will also receive $1,500 digital vouchers to put towards government fees and charges. 

"These changes mean around 36,000 businesses will save on average $34,000 each year for the next two years – including 3,500 that will pay no tax at all," Mr Perrottet said. 

"It's all about getting Government out of the way so businesses get on with business." 

Unions NSW Secretary Mark Morey slammed the budget, and said Mr Perrottet was holding the state back through a misguided mix of iedology and loyalty to big business. 

"While the Commonwealth tries to put money in the pocket of workers through tax cuts, Dominic Perrottet is picking their pocket with wage cuts before it can be spent," Mr Morey said. 

“This is why the Budget papers forecast a sluggish return to jobs growth.

"Under the current misguided approach, it will be almost four years until pre-crisis employment levels return."

Mr Perrottet also announced the 'Out and About' scheme, where every adult in NSW will receive four $25 vouchers to spend at entertainment and cultural venues to kickstart economic recovery. 

The vouchers are required to be used separately and in one transaction; two can be used at restaurants, cafes, and clubs, and the other two can be used at cultural centres, performing arts, cinemas, and amusement parks. 

"In our time of need, we encourage anyone who can, to go out and enjoy the best our State has to offer, and support the businesses doing it tough," Mr Perrottet said. 

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