The property industry has welcomed Federal Treasurer Joe Hockey calling for a proper debate on state taxes in his address at the PwC Tax Reform Forum in Melbourne on Wednesday. Hockey said the states must change their over-reliance on state taxes including stamp duty and rethink their opposition to raising the GST. "Surely it is not beyond the capacity of us as a country to have a sensible, mature debate about long-term tax reform more generally," he said.

Property Council of Australia chief executive Ken Morrison said Hockey had said "what everyone knows" about stamp duty being "harmful, distortive tax which needs to be abolished." Morrison said the property industry currently pays $77 billion in tax to all three levels of government, and Treasury estimates show that property specific taxes make up 9 percent of Australia's total tax take compared to an OECD average of 5 percent.

The government is currently working on a tax white paper. Hockey said that many of the submissions to the tax white paper process have called for increasing the rate or base of the GST, and for the states to abolish remaining inefficient duties and taxes. Reforming the federal tax system is expected to be a topic of discussion at next week's leader's summit.