Why change and why now?
Property tax reform could have tangible benefits for everyone in NSW, boosting home ownership, household mobility, the economy and jobs.
Making home ownership more achievable
The Government’s vision for NSW is for more people to be able to own their own home, with more freedom to choose the right home for themselves and their family at every stage of life. That vision extends to all – from first home buyers looking to get a foot on the property ladder, to frontline workers moving to serve our regional communities, to retirees who are ready to downsize.
Removing the upfront cost of stamp duty could remove tens of thousands of dollars from the home purchase process and make it easier for first home buyers, families looking to upgrade and others looking to change their property to save what is needed to purchase their next home.
The proposed changes could also place downward pressure on home prices over the longer term, making housing more affordable for all.
Australian and international evidence suggests property transactions could increase by 20-30% in the short-term and 40-60% in the long run by introducing these changes.
Example: the median property in NSW costs around $680,000. A buyer who opts-in to the property tax could save up to $20,000 over the first four years of ownership.
Delivering a strong economy for NSW
Over the years, numerous experts have called for the abolition of stamp duty. The most recent call for stamp duty reform was made by the NSW Review of Federal Financial Relations (2020), chaired by David Thodey. The FFR Review found that an annual tax on land values would be more productive and would raise the same revenue at a lower economic cost.
Other expert reports have also reached a similar conclusion, including IPART (2008), the Henry Review (2010), the NSW Financial Audit (2011), the ACT Taxation Review (2012), the McKell Institute (2016), the Commonwealth Productivity Commission’s ‘Shifting the Dial’ report (2017), the Grattan Institute (2018), the Australia Institute (2020) and NSW Productivity Green Paper (2020).
These proposed changes could inject around $11 billion into the NSW economy in the first four years. In the long run, property tax is estimated to lift Gross State Product (GSP) by 1.7%, or $3,300 per household; and increase employment by 1.4%, or 75,000 additional jobs.