At last it feels like stamp duty changes are coming.
We have clearly now moved beyond any debate about whether stamp duty should be removed or not. It has been castigated as a draconian tax for decades by numerous tax reform reviews and economist. Now even the politicians agree.
The 2 outstanding questions are how, and when.
NSW changes to stamp duty.
NSW Premier Dominic Perrottet, is taking a proposal to the Federal Government. He wants to replace stamp duty with a broad-based land tax, and apparently needs Federal help to do it. It will be very interesting to see what sort of response he gets. The federal Treasurer, Jim Chalmers, is dealing with a $1 trillion national debt and an uncertain economic outlook. However, in May 2022, Dr Chalmers said he was prepared to lead a conversation on swapping stamp duties for land taxes if Labor won the May election.
The Perrottet plan is yet to be fully detailed, but it includes giving buyers the option to opt in to annual land tax, in place of a one of stamp duty payment.
If the Federal Government say no, do NSW move ahead anyway as the ACT have done? ACT is now 10 years into a 20 year process to phase out stamp duty in place of land tax. ACT have been collecting more revenue in land tax than they would have otherwise collected from stamp duty.
What if NSW removed stamp duty and Victoria didn’t?
If NSW pursues property tax reform alone, it could result in a very different property market in NSW compared to other states. For investors who are more agnostic on a property’s location that owner occupiers, it could create two very different markets.
Given how long it has taken the stamp duty debate to get this far I think we still have some time to go before we see any difinitive action.
