It's not easy to get agreement in Australia on tax reform - except when it comes to stamp duty. There's a universal view among the experts that stamp duty does more harm than good and is our least efficient and most unpopular tax.
Property buyers have been paying stamp duty in NSW since 1865. The way we live and work has changed dramatically since then, but the burden of stamp duty hasn't.
It makes housing less affordable than it should be, including for first-home buyers, and discourages others from buying or selling a house as their needs change, including when people need to move for new work or opportunities.
Stamp duty can be a wild rollercoaster ride for government revenues. When property prices go up, so do stamp duty revenues. When markets flatten out or drop, the government collects less tax and has to look for other sources of revenue.
There are plenty of reasons to get rid of stamp duty. The challenge has always been how to replace billions of dollars in lost tax revenue in a way that doesn't just shift the burden to another part of the community.
As a result, fixing the stamp duty dilemma has been left in the too-hard basket. To his great credit, the NSW Treasurer Dominic Perrottet has decided it's time to do something about it.
The Treasurer's plan includes some features that will be critical to its success.
Importantly, it is based on opting-in to the new annual property tax instead of paying stamp duty. It also protects those who have already paid stamp duty from being double-taxed. If you're not buying a property, you're not impacted. If you are, you have choice. The scheme also addresses concerns of those who rent or are experiencing financial hardship. Existing stamp duty concessions for first-home buyers could be replaced with another form of grant.
Over the longer term, the Treasurer says his plan will be revenue neutral. In other words, it's not revenue raising under the cloak of reform as has happened under the ACT's land tax reform process.
A reform this important will obviously generate a lot of questions to be addressed during the community consultation phase.
But the potential benefits for individual households and the NSW economy demand that we take on the task.
Everyone needs a home so everyone has an important stake in this discussion. We look forward to playing a constructive role in delivering a property tax scheme that delivers a better outcome for people in the Hunter and the rest of NSW.
Anita Hugo is the Hunter Regional Director, Property Council of Australia
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