Giving people a choice to pay an annual land tax instead of stamp duty is a long-term reform that will bring prosperity to NSW and help people enter the housing market, NSW Treasurer Dominic Perrottet says.
Speaking to reporters a day after delivering the 2020/21 budget, Mr Perrottet said NSW was leading the way in getting rid of "one of the worst taxes that states rely on".
The proposal, which would be open for public feedback until March, would give home buyers the option of replacing stamp duty with an annual tax based on land value, to help more people enter the market.
"It's a long-term reform that will bring economic prosperity to our state. We know that home ownership is something that is out of the reach of many people across our state," he said on Wednesday.
It now took people an average of two-and-a-half years to save enough to pay stamp duty compared to one year in 1992, he said.
"The reality is that many people don't move properties because of the impediment of stamp duty - it is the worst tax," he said.
People were discouraged from buying and selling properties because they could be slugged with round $150,000 in stamp duty, he said.
"Stamp duty came from a bygone era where you bought one home, you started your family, you had one job and you never moved," he told Sydney radio 2GB.
Tax reform was overdue, with every state's revenue system is based on inefficient taxes like payroll tax and stamp duty, he said.
Mr Perrottet's budget was headlined by large cuts to payroll tax - from 5.45 per cent to 4.85 per cent for two years - saving businesses an average $34,000 annually.
It also included a $500 million stimulus package, putting four $25 food and entertainment vouchers in the hands of NSW adults, which will begin in Sydney's CBD next month ahead of a wider rollout.
The budget spend $98.1 billion over the 2020/21 budget, leading to a deficit of $16.0 billion as the state props up the coronavirus-battered economy while maintaining its ambitious infrastructure plan.
"Ultimately, we believe strong fiscal management, the maintenance of our asset recycling approach and borrowing at record low rates sets up our state for future prosperity," Mr Perrottet said on Tuesday.
But questions are being asked about the figures underlying the estimated $104 billion net debt by June 2024 and a return to surplus the following year.
Forecasts in the budget, including expected growth in international tourism and migration, rely on 20 per cent of residents being vaccinated by September 2021 and its wider availability allowing international borders to open three months later.
Budget papers accept the economic outlook is subject to "an unusually high degree of uncertainty and risk" while Mr Perrottet said fiscal forecasts were conservative.
Opposition Leader Jodi McKay is worried about assumptions on a rebound in trade.
"There are a lot of assumptions he's made that are precarious and we will make sure we can keep him honest in delivering what he says he's going to do," she told reporters of the treasurer's financial plan.
Australian Associated Press