Stamp duty has tripled in some Aussie cities since 2004 and this could be the perfect time to scrap the tax altogether

• New analysis from Nine-owned property group Domain shows homebuyers in some cases are paying more than three times as much stamp duty than just a few years ago, renewing calls to scrap it altogether.

• Critics of the tax range from think-tanks like The Grattan Institute to business leaders like Mirvac CEO Susan Lloyd-Hurtwitz, both of whom have called for it to be replaced by a land tax.

• Such a proposal would boost an ailing Australian economy by an estimated $17 billion, with Domain economist Trent Wiltshire urging federal and state governments to act now.

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In the world of real estate, there's likely no more hated words than 'stamp duty' -- the tax you have to pay the state government on most property purchases.

The unpopular tax has made plenty of enemies over the years but now it can add Australian property giant Domain to the list.

Domain chief economist Trent Wiltshire told Business Insider Australia that it was time for stamp duty to go.

"After substantial house and unit price rises, the stamp duty burden has increased so much in Australian capital cities, particularly Sydney and Melbourne," Wiltshire said.

READ MORE: Stamp duty is stupid

In Sydney and Melbourne, that's added tens of thousands of dollars to the final price homebuyers pay in the last 15 years, according to Domain's analysis. While coming off a much lower base, Brisbane buyers are spending almost four times as much as they did in 2004. In fact, Perth notwithstanding, every state capital has seen stamp duties double or more over that period.

"If you compare those increases to wages it's not hard to see how the burden of stamp duties has grown," Wiltshire said.

READ MORE: Australian wage growth remains sluggish and that's unlikely to change anytime soon

The benefits of reform

But the issues with stamp duty goes beyond the problem of affordability. Some exemptions for first homebuyers aside, you pay stamp duty every time you buy a property and that reduces the amount you can spend hurting sellers in turn, according to Wiltshire.

"Ultimately that leads to fewer people buying and selling property than they would otherwise. That stops people from moving to where they might find a better job or perhaps moving closer to family. People commute further than they would otherwise, which leads to greater congestion and people buy bigger houses then they need to avoid having to buy and sell again. There's a whole host of other flow-on effect problems," he said.

"Stamp duty is one of the least efficient taxes out there and land tax -- what we should replace it with -- is one of the most efficient taxes out there."

A land tax would instead be a flat tax paid annually, rather than a once-off payment. The Grattan Institute has suggested it be set between $5-$7 for every $1000 of unimproved land value.

Wiltshire admitted he's not the first commentator who has urged the government to scrap stamp duty in favour of a land tax. His latest appeal to government echoes many before him, including everyone from the Productivity Commission to Mirvac CEO Susan Lloyd-Hurtwitz.

Not only would move would make housing more affordable, but it would boost the sluggish Australian economy by $17 billion in producitivty gains each and every year, according to think tank The Grattan Institute.

"If people work in jobs they are more suited for, they produce more with the same input with a more efficient labour force. It makes greater use of our existing stock of dwellings because people live in more appropriately sized houses," Wiltshire said.

The economist has thus joined a whole host of commentators in urging the government to scrap stamp duty and replace it with a land tax.

But here's the problem

If it's such a no-brainer, however, why hasn't Australia just gone ahead and done it already?

Firstly, any undertaking to reform taxation is politically dangerous. Consider the fact that the introduction of the GST cost opposition leader John Hewson the 'unlosable election' in 1993 and almost cost his successor John Howard another one a few short years later.

Next, replacing stamp duty will inevitably hurt some buyers more than others -- namely those who have already been stung by a one-off tax who are now being asked to pay another.

"Recent purchasers would be reluctant to pay an annual tax so soon after paying stamp duty. A property tax would pose difficulties for people who are asset-rich but income-poor, especially retirees," Wiltshire said.

That's why Wiltshire recommends a long transitionary period which would see land-tax be phased in gradually -- as is currently happening in the ACT.

"The transition model is tough though politically. We've witnessed that opposition scare campaigns are effective in Australia so a government promising to do this over 20 years would likely face an opposition promising the opposite so its a political issue," he said.

"That's why it hasn't happened -- the politics have been too hard."

Governments in larger states like New South Wales and Victoria will inevitably face more of a political challenge trying to change the system as a result.

"That's why I think the federal government should help. It doesn't have much currently on its policy agenda. It's also looking for reforms and there's $17 billion boost to the economy from this. So they really could encourage states incentives to do this like offering billions of dollars for new infrastructure for those states that act," Wiltshire said.

At a time when the economy sorely needs it, there's never been a better time than now to tackle stamp duty head-on.

"It's not a reform that will offer a short-term boost. It's a difficult reform that will take a long time for the payoff to eventuate. That's the payoff which has really been missing and the kind we really need to give the economy a boost."

Business Insider Australia is operated by the Pedestrian Group, a wholly-owned subsidiary of Nine.