Netflix of property tax: NSW challenges other states on stamp duty reform
The NSW Government has thrown down the gauntlet to other states on the need for tax reform, proposing a dramatic overhaul of punishing upfront stamp duty payments in favour of spreading the cost over several years in a potential boon for homebuyers.
An annual property levy could replace stamp duty for NSW homebuyers under proposed tax changes in the stateās 2020/21 budget, which have opened the door for national reform.
Instead of being slugged an average $34,000 in stamp duty at the time of purchasing a property, the impost would be spread over a number of years to help more people enter the market.
āStamp duty is a tax from a bygone era,ā NSW Treasurer Dominic Perrottet said on ABC.
āThis will be like the Netflix of property tax.ā
Perrottet revealed the plan as part of the state budget and said itās an example of NSW setting a tax agenda that could have national significance, pointing to the need for talks with Canberra.
āTax reform is challenging, it is tough, itās been talked about for a long time,ā he said.
āWe have great unity among the states ā¦ to work with the Commonwealth government to drive reform.ā
You might like
He said the federal government in the past had assisted states with asset recycling incentives, for example, to improve systems.
āFor too long we have a system that states that perform get penalised and states that donāt get paid and that is not a strong federal system.
āWe need to improve it and this work will move our tax system to a much better place.ā
The stamp duty proposal will go to public consultation until March.
The scheme could reduce outlays by about $20,000 over the first four years of home-ownership and would be capped at the rate calculated at the point of purchase.
āStamp 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,ā Perrottet said.
āIf you want to move, change jobs, or switch careers, upsize or downsize to match your family size, stamp duty can be a spanner in the works.ā
Buyers will still be able to choose to pay their duty upfront.
Stay informed, daily
Coronavirus restrictions on real estate auctions meant revenue forecasts from transfer duties will take a $1.2 billion hit in 2020/21, but the expected $7.9 billion to be collected still represents a 14 per cent increase on last financial year.
Gambling and betting tax revenue is expected to be $2.8 billion in 2020/21, an increase of almost $50 million or 1.8 per cent.
Mining royalties are forecast to fall to $1.4 billion.
āThe much weaker outlook for coal royalties is due to a combination of lower than previously forecast thermal coal prices and a higher-than-anticipated Australian dollar,ā the budget papers said.
āImprovements to the expectations for gold and copper prices and production volumes provide a minor offset.ā
NSW will also take its shared cut of national GST revenue, at $16.3 billion, down from $18.1 billion in 2019/20.
The Liberal-National government will also take a knife to payroll tax as it helps business overcome a triple-hit of drought, bushfires and COVID-19, cutting the rate from 5.45 per cent to 4.85 per cent for two years.
Payroll tax remains NSWās largest source of taxation revenue, growing by a forecast 0.2 per cent to $8.5 billion for 2020/21.
The tax measures received a glowing endorsement from the Business Council of Australia.
āEvery premier and chief minister in the country should be watching because NSW has set the standard for building a strong business-led recovery,ā chief executive Jennifer Westacott said.
āThe Governmentās blueprint and tax reform agenda will help make NSW the best place in the country for businesses who want to invest, expand and create new jobs.ā
-AAP
Want to see more stories from InDaily Qld in your Google search results?
- Click here to set InDaily Qld as a preferred source.
- Tick the box next to "InDaily Qld". That's it.
