NSW Treasurer pushed to phase out stamp duty in state budget

The NSW government is preparing to make a major change to an “inherently terrible tax” on people moving homes.

Dominic Perrottet is preparing to overhaul stamp duty and introduce a land tax in this month’s budget.

The NSW Premier is expected to outline the major change when the budget is handed down next week.

Urban advocacy groups have welcomed the move to Mr Perrottet’s long-held goal, which was first reported by the Sydney Morning Herald on Monday.

Under the changes, home buyers would be able to opt in to annual land tax, rather than an upfront one-off stamp duty payment.

The NSW government could overhaul stamp duty and follow the ACT’s lead in transitioning to a land tax opt in. Picture: NCA NewsWire / David Swift

The NSW Government is remaining tight lipped on whether or not the reform will actually form part of the final budget.

But Ehssan Veiszadeh from the Committee for Sydney said phasing out stamp duty was the most important tax reform the NSW government could undertake.

“Every major study on the tax structure identifies this as a key opportunity,” Mr Veiszadeh said.

The NSW Cabinet’s expenditure review committee has reportedly approved a reservation of funding for the changes to stamp duty.

Nationally, the ACT is the only jurisdiction which has overhauled stamp duty, which many see as a “punishment” for moving homes.

Under the proposed NSW plan, the top 20 per cent of residential property prices would need to continue to pay stamp duty and would not be eligible to opt in for land tax.

The goal would eventually be to phase out stamp duty across the state. The ACT began a 20-year phase out in 2012.

Mr Perrottet has long championed the goal to overhaul stamp duty, saying last year he believed an “annual amount that is paid is better than a substantive upfront figure”.

He also called stamp duty an “inherently terrible tax” and “by far the most inefficient tax we have in our state”.

NSW Treasurer Matt Kean will hand down the budget next week. Picture: NCA NewsWire / Flavio Brancaleone

Mr Veiszadeh expects the budget plan to be broken down into two parts.

“They are finding their way through the politics in two ways: first, they are making it voluntary, so people can opt in to a land tax instead of stamp duty if they choose,” he said.

“And second, they are working cooperatively with a reforming Labor Government, which has signalled a willingness to help finance the transition.

“The problem with stamp duty is that it’s a tax on moving home. It’s discouragement for properties to transact – which means that it makes it harder for people to adjust where they live based on things like changing family size or getting a new job.”

The NSW government will hand down its pre-election budget next Tuesday.