NSW Treasurer Dominic Perrottet says there’s no better time for bold tax reform after the economic damage wrought by the pandemic – but the federal government has to take the lead.
He was speaking two days after delivering the NSW budget, which mapped out a proposal to reform stamp duty while cutting payroll tax from 5.45 per cent to 4.85 per cent – the lowest in the nation.
The treasurer is hoping the move will pave the way for national tax reform.
“We need to work with the Commonwealth government … on a much better tax mix at a state and federal level that drives economic growth,” he said.
“In the middle of a pandemic with the economic challenges that we face (it is the perfect time) to get cracking on reform and take on some of the challenging areas that we haven’t been able to do in the past,” he said on ABC radio on Thursday.
“I don’t think states can do this alone.
“It’s very, very difficult to go down these paths of reform … without working with a Commonwealth government on it.
“It’s the Commonwealth that needs to work with the states to take on bold and difficult reform.”
Mr Perrottet acknowledged the difficulties of federal-state co-operation but said if Labor and Liberal states worked together “a lot of the political heat” could be avoided.
“I really don’t believe the states can do it alone – you need the leadership from the federal government as well … there’s no better time,” he said.
The treasurer insisted the price of family homes won’t go up as a result of NSW budget measures that allow home buyers to avoid paying exorbitant stamp duty up front.
He added that his government was also looking to provide $25,000 grants for first home owners.
One of the key measures in Tuesday’s budget was giving home buyers the option to pay an annual levy in lieu of stamp duty.
People would now be more likely to move around and find a house that suited their needs rather than being stuck in an unsuitable home because of the average $34,000 stamp duty cost, Mr Perrottet said.
The measure would cost the government $11 billion over four years “so it’s certainly not a move that would increase government revenue”, he said.
It would however, help homebuyers, drive economic growth about 1.7 per cent, increase property transfers and create about 75,000 jobs.
“And that’s great for the NSW economy,” Mr Perrottet said.
The proposal, which is open for public feedback until March, offers buyers the choice to pay stamp duty up front, or an annual levy in line with council rates that would be phased in over 50 years.
Once a buyer opted for an annual surcharge, that property would remain an annual surcharge property, so over time the state would transition to that system, Mr Perrottet said.