Labor promise to abolish stamp duty for NSW first-home buyers

NSW Labor’s plan to abolish stamp duty for first-home buyers on properties up to $800,000 ­creates referendum on Perrottet’s taxation reform.

NSW Labor will abolish hefty stamp duty fees for first-home buyers on properties valued up to $800,000 if elected in March.

NSW Labor will abolish hefty stamp duty fees for first-home buyers on properties valued up to $800,000 if elected in March, ­creating a referendum on Premier Dominic Perrottet’s long-awaited effort to reform the state’s taxation system.

Costing taxpayers $700m across the next three years, Labor will also offer concessional rates to first-home buyers on properties valued up $1m, with independent modelling undertaken by the state’s Parliamentary Budget ­Office (PBO) showing the scheme will affect more than 95 per cent of people wanting to enter the housing market.

The PBO modelling claimed more than 46,000 people would benefit from the scheme over the next three years, including 27,700 who would pay no stamp duty whatsoever, and 18,800 who could claim a significant discount.

In a direct challenge to Mr Perrottet’s stripped-back reform of stamp duty – legislating an option for first-home buyers to pay a yearly land tax as opposed to stamp duty from January 16 – NSW Labor committed to abolishing what they have branded a “forever tax”.

Just over three months out from the March 25 election, NSW Labor leader Chris Minns launched his party’s costliest policy to date, saying he would not “saddle” first-home buyers with a “forever tax on the family home”.

“I understand the stress of trying to purchase your first home. I want more singles, couples and families realising this dream,” Mr Minns said. “What I will not do is saddle first-home buyers with a new, yearly tax bill that increases every year.”

NSW Labor Leader Chris Minns. Picture: Richard Dobson

Mr Minn’s criticism comes in the face of former Labor prime minister Paul Keating’s praise for the NSW government’s land tax reform, saying that moving away from stamp duty would allow for greater “fluidity and ease of movement of people”, in what he branded a “positive move”.

Under the government’s proposed initiative, from early next year first-home buyers will have the option to pay stamp duty or an annual tax of $400, plus 0.3 per cent of the property’s land value on properties valued up to $1.5m.

A significant source of revenue for the NSW government, stamp duty raises more than $2bn per annum for the state’s coffers.

Mr Perrottet has sought support from Treasurer Jim Chalmers to help plug the significant loss, but Dr Chalmers has ruled out ­offering the states any funding for property tax reform.

The opt-in scheme – that will not leave properties grand­fathered to the land tax – will cost NSW taxpayers $775m over the forward estimates. With Mr Perrottet a long-term champion of abolishing stamp duty, Labor has accused him of using the limited forms as a “Trojan horse” to implement a property tax statewide.

NSW Premier Dominic Perrottet. Picture: Mark Metcalfe/Getty Images

Opposition treasury spokesman Daniel Mookhey said the government’s land tax reform would increase the cost-of-living pressures affecting young people in the midst of soaring energy costs, labelling his party’s policy a “sensible proposal”.

“When we have rising interest rates, rising cost of living, rising electricity prices, the last thing first-home buyers need is a forever tax on their homes,” Mr Mookhey said.

“This is a sensible proposal that will help almost all first-home buyers get a foot into the property market,” he said.

Labor’s decision to resist land tax reform has met stern criticism from taxation economists.

Australian National University professor and director of the Tax and Transfer Policy Institute ­Robert Breunig has previously ­labelled Mr Minns’s opposition to land tax as a “ridiculous” scare campaign.