Stamp duty tax adds an unexpected extra billion to NSW budget

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NSW earned $9.379 billion in stamp duty revenue for the 2020-21 financial year.(AAP: Dan Himbrechts)

Sydney’s booming property market has resulted in the state government collecting $1 billion more than expected in stamp duty revenue.

Key points:

  • Stamp duty has earned NSW $9.379 billion for the 2020-21 financial year
  • The tax is now the state’s largest taxation revenue source
  • The state budget will be delivered on Tuesday

Ahead of Tuesday’s budget, the ABC can reveal the revenue earned from stamp duty is $9.379 billion for the 2020-21 financial year.

The forecast was $8.372 billion in the half-yearly review just four months ago and that had been revised from the last year’s budget forecast of $7.9 billion.

It also means stamp duty is now the state’s largest taxation revenue source, overtaking payroll tax.

“It’s good news for the New South Wales budget which is recovering from a very difficult 12 months,” Treasurer Dominic Perrottet said.

“It obviously helps providing government services to the people of our state in circumstances where we want the physical position of New South Wales to recover.”

Dominic Perrottet
Despite the funding boost, Treasurer Dominic Perrottet is still keen to see stamp duty abolished.(AAP: Dan Himbrechts)

This is the highest stamp duty revenue since the 2016-17 financial year, which was $9.67 billion, when house prices were soaring.

In 2019-20, stamp duty revenue was $6.95 billion, while in 2018-19 it was $7.4 billion.

But the better than expected result in 2020-21 hasn’t changed the Treasurer’s mind that stamp duty should be scrapped.

“While stamp duty might be the number one revenue source the New South Wales budget receives,” Mr Perrottet said.

“It doesn’t make it good tax.”

In last year’s budget, Mr Perrottet unveiled a plan to overhaul stamp duty.

He proposed phasing it by allowing homebuyers to pay an annual land tax, but initially, buyers would have a choice as to which tax they would pay.

“The worst thing about stamp duty is that it stops many young families from getting into the property market,” he said.

“We need to look at better ways of doing things and government’s shouldn’t just rely on rivers of gold from volatile taxes.”

Last week the Treasurer released a progress paper on his proposal, which found there was overwhelming support for stamp duty reform but there wasn’t the same enthusiasm for replacing it with an annual land tax.