Former Liberal leader Iain Evans says a shift from stamp duty to land tax CAN be done – if it’s done right.

Not for the first time, the state Labor Government has floated the idea of replacing the one-off stamp duty on property sales with a new annual land tax on all properties.

For example, instead of paying a one off $16,830 stamp duty on the median house price of $410,000, you would pay a new land tax of $1200 a year – every year.

Then Treasurer Snelling floated this same idea in 2012 and had the Treasury Department model the change.

As then Shadow Treasurer, I successfully moved that Parliament’s Economics & Finance Committee request the modelling for this change from the Treasury Department.

Although the modelling was done, the then Treasurer refused to release it to the committee before the 2014 election.

After the election, I again successfully moved that the same committee again request the Treasury modelling. Again, it was not been released.

Remarkably on both occasions when the Economies & Finance Committee wanted the modelling released, the committee was government-controlled, meaning even the government members wanted the modelling released!

Releasing the modelling publicly would inform the debate and allow industry groups to see the real impact of what they are asking for. It will also show the impact on families.

Those who support the change will argue that it will provide more stability of income for the state budget. An annual invoice every year to every property owner in the state is a more reliable method for Treasury to predict income than one-off stamp duty payments, which vary greatly with property market sales.

It may be easier for Treasury – but is it easier for families?

Rather than change the whole system of one-off stamp duty to an annual land tax all at once, there is a better way.

Start with residential properties and let residential taxpayers decide which tax they pay – the one-off stamp duty or new annual land tax.

Give residential taxpayers the chance to opt into the scheme based on what best suits their financial circumstances.

Iain Evans and his family at thes announcement of his retirement.

This means those existing property owners who have already paid stamp duty are not double-taxed.

This phasing-in allows taxpayers to choose the tax that best suits them.

The new system may help groups like first homebuyers or those wishing to downsize who are struggling to save a deposit. No stamp duty payment will mean cheaper entry into the housing or retirement market but they will compare it to the new annual land tax they will have to pay. While it might start at $1200 a year where will it end up – $1500, $2000, or in State Bank disaster times, $2500 a year?

To provide government more budget certainty, once a property is in the new annual land tax system it should not be able to be removed.

Hence owners looking at which tax to pay will consider the impact on future selling price of having an annual land tax – and future buyers will factor that into their buying price.

Will a future buyer like an annual land tax? That’s a matter for the market.

Having an opt in system will also give policy makers and industry groups a chance to see if the change has support.  The take up rate after a few years will soon indicate support or not.

The taxpayer will need a lot of convincing that a proposed $1200 a year house tax does not end up being a $2500 a year house tax in a few years. Some people will prefer the certainty of a one-off stamp duty payment than risk the rise in land tax. Let them choose.

This scheme could easily be modified to restrict it to first home owners only or those downsizing to begin with and a similar phase in for non-residential properties could be done.

The scheme could be designed to be budget neutral – although taxpayers will be cynical about such claims.

Giving taxpayers an option to choose is the fairest way to reform stamp duty.

Iain Evans is a former Leader of the Opposition and was Shadow Treasurer from 2010 to May 2014.