Australia stands to gain $24.3 billion every year in GDP from 2047 if state governments phased out stamp duty replacing it with a broad-based land tax, a new report has found.

Transitioning to this new tax system would also boost government tax revenue to $11.2 billion annually by 2047.

Currently in all states and territories, homeowners must pay stamp duty when they buy a home. The transaction tax, paid in a lump sum, is charged at varying percentages depending on the jurisdiction.

If a broad-based land tax was introduced, homeowners would be charged an annual levy, costing someone in Sydney or Melbourne between $1500 to $2000 a year on a median-priced house, according to Grattan Institute research in 2016.

Infrastructure Australia’s Making Reform Happen paper made the case for major reforms to better deliver infrastructure including land use to prepare for the “profound change” Australia will face as the population is projected to grow to more than 30 million people by 2031.

Chief executive Philip Davis said revenue generated from switching taxes would come about from ‘productivity benefits’ rather than homeowners’ direct tax contributions.

For example, when land is rezoned or a new train station is proposed there is an uplift in value with the stroke of the pen, according to Per Capita senior economist Warwick Smith, and governments can capitalise on that under this proposal.

“Clearly the people who own those properties weren’t responsible for that uplift in value. If a land tax was well structured enough the government could be building infrastructure that essentially pays for itself,” Mr Smith said.

The same tax could also raise revenue from developers land banking or discourage it all together, along with other tax mechanisms, he said.

For individuals, the current tax can make it harder to move for better job opportunities while for businesses it “reduces the pool of talent from which they can hire,” according to the report.

Despite total stamp duty revenues having almost doubled in the past four years, reaching $20.6 billion by the end of the 2015 financial year, it’s deemed inefficient and unreliable as it relies on property turnover and high prices.

In 2012, the Australian Capital Territory began to phase out the residential property transaction tax over a 20-year period, a model to follow according to IA.

It believed the long-term reform process of the ACT reduced the “volatility of government revenues by moving from duties to a more reliable and stable land tax revenue stream.”

Research Fellow at the Grattan Institute Brendan Coates said it would potentially be one of the biggest economic reforms that could boost Australian living standards.

“Land taxes can actually have the benefit of improving the wellbeing of Australians because it taxes the property owned by foreigners as well,” said Mr Coates.

The greatest impediment, however, was convincing Australians themselves, according to Mr Coates who believed homeowners were more averse to the idea of a recurrent yearly tax, albeit small, compared to the lump sum of stamp duty.

He said IA’s paper was not going to change policy overnight as politicians were reluctant to make changes that were unpopular with voters.

But Mr Coates said the research was significant because it continued to chip away at the problem to build public support.

“It [the paper] sets out a way to incentivise the reform for the states. So anything it can do to shift the needle for the states is a welcome step,” he said.

“The ACT has shown you can get it done and get re-elected.”

Mr Davies acknowledged that there might be negative community perception around broad-based land tax but it was up to the states and territories to provide a compelling narrative to inform the community and industries that the current system was ‘broken’.