Under this proposal the Commonwealth Government would provide concessional loans to state and territory governments (excluding the ACT) to enable them to replace their existing stamp duty on sales of residential and non-residential property with a broad based land tax.

From 1 July 2017, property acquisitions would not be liable for stamp duty, but would instead commence paying an annual land tax.

The Commonwealth would pay the states up front the difference between stamp duty and land tax collections for each financial year, with the states returning future land tax payments until the Commonwealth loan has been paid off. Concessional loans would only be provided until the financial year ending 30 June 2030.

The Commonwealth Government would only provide the concessional loans to cover the foregone stamp duty on the first sale of a property, not subsequent sales of the same property.

The land tax rates would be set by each state and territory (the states) so that the expected state revenue collection is broadly revenue neutral across the term of the proposal, with no Commonwealth loans outstanding at 30 June 2030.

States would also be required to cover the Commonwealth’s borrowing costs for the proposal, with interest charged annually at a rate equal to the Commonwealth’s cost of borrowing.

The tax would not apply to land owned by local, state or federal governments, pastoral leases or native title or freehold title held by Aboriginal land councils.