Australian State Leader Pushes to Eliminate ‘Worst’ Tax

NSW Premier Dominic Perrottet speaks to media during an announcement at Liverpool Hospital in Sydney, Australia, on June 6, 2022. AAP Image/Flavio Brancaleone

New South Wales Premier Dominic Perrottet’s bid to abolish stamp duty is back in the limelight, calling it the “worst tax” that a state could have.

The premier has been outspoken on scrapping stamp duty—a significant one-off tax payment when purchasing a home—since he was the state’s treasurer.

The state government’s proposed reform would give home buyers a choice to pay the one-time tax or opt into a perpetual annual land tax.

“I believe stamp duty is the worst tax that any government can have,” Perrottet said on June 13. “It is a massive impediment for people getting into the housing market.”

Perrottet indicated that his government had yet to formally announce a policy around stamp duty as it required the approval of the federal government.

“This is a moment for the federal government and state governments to work together to unlock economic opportunity for people going forward,” he said ahead of his meeting with the prime minister on June 17.

Proponents of an annual land tax say it would offer the state government a more steady and predictable revenue stream, compared to one-off stamp duty payments, which rise and fall depending on the amount of property transactions occurring each year.

Stamp duty accounted for $10 billion of the New South Wales budget in the 2020-21 financial year.

The state’s opposition Treasurer Daniel Mookhey has criticised the proposal and said Labor’s internal modelling suggested the change could force families to pay $2,400 (US$1,700) a year in land tax in perpetuity.

“I don’t know where Mr. Perrottet thinks that working families could find the money to pay him an annual land tax on their home that lasts forever,” Mookhey said, calling the premier “out of touch.”

A general view of homes in McMahons Point in Sydney, Australia, on May 5, 2022. Brendon Thorne/Getty Images

The Committee for Sydney, an independent advocacy and urban policy think tank, called the proposed stamp duty changes the “most important” tax reform that the state government could carry out.

“The problem with stamp duty is it’s ... a discouragement for properties to transact, which means it makes it harder for people to adjust where they live based on things like changing family size or getting a new job,” Deputy CEO Ehssan Veiszadeh said in a statement.

Currently, stamp duty for a home priced at over $1,033,000 (US$720,000), the highest payment bracket, is $41,820 (US$30,000) plus 5.5 percent of the house value above $1,033,000.

The median house price in Sydney is $1.2 million and $800,000 in regional New South Wales after significant growth in home values over 2021.

AAP contributed to this article.