The Victorian Government is reportedly considering scrapping stamp duty in favour of annual land tax payments.

Often considered a growth-killer by economists, the lump sum tax is paid to Australian state governments when a home-buyer purchases a property.

But with a huge decline in the housing market, Premier Daniel Andrews is examining new ways to stimulate the state's real estate sector.

While the price of the tax varies in different states and cities, in Melbourne where the median residential home is $819,611, the cost of stamp duty is $46,383.36, according to Core Logic data.

But since the coronavirus crisis began the state's property market has plummeted, leaving a massive hole in their annual $6billion cash cow.

The Victorian Government is reportedly considering scrapping stamp duty in favour of annual land tax payments (stock image)

Victorian treasurer Tim Pallas told the Age the government is expecting property sales and house prices to fall about nine percent this year, which is likely to bring a similar percentage fall in stamp duty.

'It's a result of buyer resistance to entering into the market and seller reluctance to offer their properties,' he said.

'So, yes, we'll see a considerable drop both in volume and in price going forward.'

With all Australian states and territories facing similar COVID-19 slow-downs, the federal government may look at overhauling the taxation system.

Even before the coronavirus derailed the property sector a report by the Productivity Commission in 2019 urged Scott Morrison to ditch the 'inefficient' tax in favour of an annual homeowners' tax.

'Shifting from stamp duties to a broad-based property tax could leave New South Wales up to $5 billion a year better off, while also improving housing affordability,' the report said.

'Stamp duties are among the most inefficient and inequitable taxes available to the states and territories.

Since the coronavirus crisis began Victoria's property market has plummeted by nine percent, leaving a massive hole in their annual $6billion cash cow

All Australian states and territories are facing similar COVID-19 slow-downs and as a result the federal government may look at overhauling the taxation system. Pictured: Medics perform coronavirus checks at drive-through COVID-19 testing centre in Sydney

'In contrast, property taxes – which are levied on the value of property holdings – are the most efficient taxes available to the states and territories.'

Victorian Premier Daniel Andrews has flagged that he would be in favour of major tax reform and is keen for the states and national cabinets to discuss the matter.

'When it comes to national reform opportunities, you can always count Victoria in for that discussion,' he told reporters last week.

'Every significant drive or wave of national reform in our country's history, Victoria has played a leading role in it and that won't be changing.'