Calls for the abolition of stamp duty resurfaced after New South Wales Treasurer Dominic Perrottet pressured the federal government to act on tax reforms.
Perrottet has called the federal government to scrap stamp duty and opt for a "more efficient" land tax.
"It's very hard to embark on reform if every two years we have a new prime minister in this country. We need political stability to provide a better reform for now and into the future," Perrottet said in a TV interview for Sky News.
The Australian Taxpayers' Alliance lauded Perrottet's calls for the abolition of stamp duty.
"Australians have become disillusioned with the housing market thanks to a lack of affordability and the high cost of making transactions. With the exception of the Hong Kong, Sydneysiders cop the least affordable homes in the world," said Julia Kokic, a research associate at ATA.
Also read: WA to scrap stamp duty rebates?
Kokic said stamp duty has been restricting the available supply of dwellings for Australian families.
"The people have spoken. The stamp duty is an undue burden on the lives of hardworking Australians," Kokic said.
However, Prime Minister Scott Morrison said the move to abolish stamp duty is just an attempt to boost consumption tax.
"When states want to dress reform up as asking the Commonwealth government to increase the goods and services tax, I'm afraid my answer is 'no'. If states want to increase the GST that's a matter for them, but we've got no interest in increasing the GST," he said in a media briefing.
Submissions to the NSW government's Federal Financial Relations Review showed that Australians support reforms to stamp duty.
"About half of all submissions raised the issue of stamp or transfer duties, with the majority calling for the tax to be replaced by something fairer, efficient and predictable that would give people greater flexibility to move house when it suits them," the report said.
Also read: Study Flags Impact Of "Absurdly High" Stamp Duty
A submission from the Committee for Sydney said stamp duty acts as a major "financial disincentive" for retirees looking to downsize.
"Stamp duty also acts as a disincentive for people to relocate to be closer to their place of employment, which not only adds to congestion but which directly undermines the Greater Sydney Commission's objective of delivering a 30-minute city," the Committee for Sydney said.
The Property Council of Australia also had similar insights, adding that stamp duty worsens the housing affordability.
"It is a tax that is a relic from our colonial past, representing a stamp of the state's authority over property transaction that has absolutely no economic relevance in our modern Australia," it said.
In a separate statement, the Urban Development Institute of Australia (UDIA) National said stamp duty is one of the most inefficient taxes in the economy.
Connie Kirk, national executive director at UDIA, said the state governments have become overly-dependent on stamp duty to sustain their budgets despite its volatility.
"We appreciate any substantial tax reform is a long-haul exercise, but it is time for governments to start planning for a switch from stamp duties to more broad-based measures such as land tax. An overhaul of property taxes is well overdue given the excessive burden carried by the industry and homebuyers," Kirk said.
