Mr Perrottet has opted to embark upon one of the biggest tax reforms in decades in an area that is fundamental to the national psyche — real estate.

Key amongst those challenges are to drive unemployment lower, return the state to growth, repair the budget over the longer term and, ultimately, reduce net debt to a more manageable level of 7 per cent gross state product from the projected peak of 14.7 per cent in 2023-2024. None of those objectives would be easy in ordinary times. And these are anything but ordinary. It seems an odd time then for the NSW Treasurer to stump up an idea that, initially at least, could wreak havoc with his budget, unsettle the electorate and irritate his Canberra colleagues. The Netflix of property tax Despite the incredible challenges on two major fronts — health and economy — Mr Perrottet has opted to embark upon one of the biggest tax reforms in decades in an area that is fundamental to the national psyche — real estate.

Property and tax can be a volatile combination. Just ask Bill Shorten. While yet to be finalised, Mr Perrottet has put in motion a plan to overhaul the way Australians have been taxed on property since Federation. He is proposing to gradually replace stamp duty with a land tax. Instead of paying a one-off upfront payment on the purchase of a property, buyers instead would pay an annual tax based on the value of their land. It is an idea that has been brewing for decades and one many economists have been pushing — particularly in recent years as home prices have soared — as a more efficient system of taxation. As housing prices in major metropolitan areas like Sydney have surged, with seven figure sums now normal, stamp duty has skyrocketed. Ordinary dwellings now command the kind of stamp duty payments once reserved for the uber-rich. It is a tax that distorts real estate decisions, particularly for the elderly, who remain in large, underutilised properties rather than face the prospect of paying out a hefty fee to downsize. For the young, adding tens of thousands of dollars to already exorbitant prices, explains why home ownership for under-35s has plummeted. "Stamp duty is a tax from a bygone era," Mr Perrottet said. "This will be like the Netflix of property tax." Implementing it won't be easy. It will require every other state to follow suit and hefty compensation from the Federal Government during the next few years. Politically, that's a tough sell. In a good year, NSW earns around $9 billion from stamp duty. Mr Perrottet's plan involves giving that away in favour of an annual, but much smaller, revenue stream which will be good for state finances down the track. But the initial period will see state revenue nosedive. The trade-off is that, according to Mr Perrottet, the more efficient tax system will inject $11 billion into the economy over the next four years. The Federal Government has long urged the states to come up with productivity enhancing economic reforms. But it may baulk at the idea of bearing the cost of implementing it.