Tax · Issue
Why won't states scrap stamp duty?
What's happening?
- State and local government taxation revenue rose 10.7 per cent (up $14.7 billion) in 2023-24, led by payroll tax, land tax and stamp duties; stamp duties on conveyances alone rose 8.0 per cent, up $2.3 billion.Source: ABS, Insights into Government Finance Statistics, Annual, 2023-24, 22 Apr 2025
- Treasury modelling estimated that each additional dollar collected by way of stamp duties reduces the living standards of Australian households by 72 cents in the long run, due to lower investment and mobility.Source: Productivity Commission, Realising the Productive Potential of Land (Supporting Paper 10), 3 Aug 2017
- NSW gives first home buyers a full exemption from transfer duty on new or existing homes valued up to $800,000, and a concessional rate up to $1 million, under the First Home Buyers Assistance Scheme.Source: Revenue NSW, First Home Buyers Assistance scheme
- Victoria is phasing out stamp duty on commercial and industrial property: from 1 July 2024 those properties are subject to duty one final time on transfer, then move to an annual property tax instead of duty on every future sale.Source: Commonwealth Grants Commission, 2025 Methodology Review - Draft Report, Jul 2024
- The ACT is continuing its phased, roughly 20-year replacement of stamp duty on conveyances with general rates revenue.Source: Commonwealth Grants Commission, 2025 Methodology Review - Draft Report, Jul 2024
Why is it happening?
It's a tax on moving, and states won't touch it.
Stamp duty is charged on the value of a property at the point of transfer, which discourages people from moving closer to work or downsizing, and encourages overinvestment in the home they already have. Treasury modelling cited by the Productivity Commission puts the long-run cost at 72 cents lost per dollar collected.
Source: Productivity Commission, Realising the Productive Potential of Land, 3 Aug 2017It's volatile, but it's a big slice of the state tax base.
Stamp duty, payroll tax and land tax together drove a $14.7 billion rise in state and local tax revenue in 2023-24. A property market downturn hits the same revenue base that pays for schools and hospitals, which makes states reluctant to give up the tax without a guaranteed replacement.
Source: ABS, Insights into Government Finance Statistics, Annual, 2023-24, 22 Apr 2025Reform only happens in pieces, not everywhere.
Victoria's switch to an annual tax on commercial and industrial property from 1 July 2024, and the ACT's two-decade phase-out, show it can be done gradually. No state has committed to replacing duty on residential property in full.
Source: Commonwealth Grants Commission, 2025 Methodology Review - Draft Report, Jul 2024How would you fix it?
Ranked by how much of the problem each one removes, in the AI's opinion, based on the facts above.
- Replace stamp duty with a broad annual land tax, phased in like the ACT.A 20-year phase-out spreads the revenue transition and gives households and the budget time to adjust, instead of a single disruptive switch.
- Let existing owners opt into the switch rather than forcing it on sale.Victoria's transitional loan model lets a purchaser choose a government-facilitated loan instead of paying duty upfront, which softens the up-front cost of the last stamp duty payment.
- Move commercial and industrial property to an annual tax first.These properties transact more often and businesses can adapt fastest, making them the easiest place to prove the model works before extending it to houses.
- Publish the mobility and living-standards cost of stamp duty every year.A regularly updated, government-published figure for what stamp duty costs households in lost mobility keeps the case for reform in front of voters instead of buried in a one-off 2017 report.
What fixing it could save?
- Grattan Institute modelling cited by the Productivity Commission found that a nationwide switch from stamp duty to a broad land tax could add $9 billion a year to GDP (government report figure).Source: Productivity Commission, Realising the Productive Potential of Land, 3 Aug 2017
- OUR estimate: NSW and Victoria together hold a bit over half of Australia's population and property turnover, so a partial reform limited to those two states could plausibly capture roughly half the national benefit, or about $4.5 billion a year.letaifixit.org note
- We show the range from that partial, two-state case ($4.5bn) up to the full national estimate ($9bn) a year.letaifixit.org note
Every line marked OUR estimate is an assumption made by an AI for this experiment. Government figures are marked as such and linked. Change the assumptions and the range changes; that is the point of showing them.
Questions people ask
How much does stamp duty raise for the states?
Stamp duty on conveyances rose 8 per cent, up $2.3 billion, in 2023-24 alone, and was one of three taxes (with payroll tax and land tax) driving a $14.7 billion rise in state and local tax revenue (ABS, Apr 2025).
Is stamp duty being phased out anywhere in Australia?
The ACT has been running a roughly 20-year phased replacement with general rates since 2012, and Victoria began replacing duty on commercial and industrial property with an annual tax from 1 July 2024 (Commonwealth Grants Commission, Jul 2024).
How much does stamp duty cost the economy?
Treasury modelling cited by the Productivity Commission found each extra dollar of stamp duty collected costs households 72 cents in lost living standards long-run, mainly through reduced mobility and investment (Productivity Commission, 2017).
How much could be saved by fixing this?
Our estimate is $4.5–9.0 billion a year. It is an AI's estimate built from the linked public figures and stated assumptions, not a government number.