NSW Treasury has released a progress paper and technical research paper on the proposed property tax reform that would allow prospective homeowners to decide whether to pay stamp duty or an annual property tax when they purchase a new home.
Treasurer Dominic Perrottet said Treasury’s NSW Property Tax Proposal Creating Jobs and Securing our Future: Progress Paper for June 2021 brought together feedback and submissions received over the past six months from the community and stakeholders.
“The NSW Treasury ‘Have Your Say’ website received more than 23,800 visits with 3,544 surveys completed since the proposal was announced last November,” Mr Perrottet said.
“At the same time, we received 57 detailed submissions from industry stakeholders and 196 community submissions,” he said.
Mr Perrottet said key findings from the consultation included a strong view that reform of the existing system was needed; the proposal resonated strongly with first home buyers; some stakeholders had concerns about how reform could impact them; the annual nature of the proposed tax raised uncertainty over potential rate increases over time; the proposal would benefit people seeking greater mobility; and the more people learnt about the proposed reform the more comfortable and supportive of it they became.
NSW Treasury said its research paper, TTRP 21-08 The economic costs of transfer duty: a literature review, examined the effect of transfer duty on the volume of housing transactions, and the welfare costs of transfer duty as compared with a broad-based land tax.
“Our interpretation of the empirical evidence, based on Australian and international studies, is that a 100 basis point decrease in the rate of transfer duty would increase property transactions by about 10 per cent,” Treasury said.
“Two recent studies of property tax reforms in the ACT examine a slightly different tax change – a reduction in transfer duty accompanied by a broadly revenue-neutral increase in land tax,” it said.
Treasury said the effect of transfer duty reductions on transaction volumes appeared similar to that found in other empirical studies and wasn’t significantly altered by the associated increase in land tax.
It said evidence suggested that a switch in the tax mix which reduced reliance on transfer duties and replaced the revenues with a broad-based land tax would significantly enhance the economic welfare of NSW residents.
Treasury’s 59-page Progress Paper can be accessed at this PS News link and its 39-page Research Paper TTRP 21-08 at this link.
