TREASURER Joe Hockey has backed calls for South Australia to abolish stamp duty for home buyers and replace it with a broad-based land tax that includes family homes.

In an interview with The Advertiser, Mr Hockey said SA would have an “early adopter” advantage by being bold and axing stamp duty.

He said the cost of an annual land tax would likely be less in the long term than upfront stamp duty, which was stopping first-home buyers getting into the market.

Mr Hockey, who is in Adelaide on Tuesday to sell his Budget delivered last Tuesday, said the trade-off for a land tax would likely have support from senior business leaders.

He emphasised SA’s liveability and low-cost housing as a selling point, saying this would become increasingly important in a connected global economy.

Mr Hockey’s comments are at odds with state Liberal leader Steven Marshall’s opposition to the idea of a broad-based land tax, prompting state Treasurer Tom Koutsantonis to attack Mr Marshall for failing to contribute to tax reform debate.

A $1200 annual land tax on the median $410,000 home, rather than an upfront $16,830 stamp duty, is among extensive options in a State Government review of state taxes unveiled in February.

The Federal Government released its own tax discussion paper on March 30, which canvasses change to stamp duty and other charges, and will result in a reform White Paper ahead of next year’s election.

South Australian business leaders have lashed the stamp duty system, arguing that it stifles innovation and investment.

“Tax reform is a critical part of the Government’s policy to create jobs, growth and opportunity. The problem we face is that our current tax system, which was designed before the 1950s, is ill-suited to the 2050s,” Mr Hockey said.

“The Government is ruling nothing in and nothing out of the tax reform process but the Government is committed to a tax system that delivers taxes that are lower, simpler and fairer.

“All levels of government, including the states, recognise that in order to stay the same, we have to make changes.”

In an opinion piece in The Advertiser, Mr Hockey argues further tax relief for workers and business can be delivered by reducing the Federal Budget deficit and cutting government debt.

He promotes the Budget’s focus on small business, which included a 1.5 per cent tax cut and instant tax deductions for equipment worth up to $20,000.

“This will be of enormous benefit to local small businesses and South Australia has more small businesses than anywhere else in Australia,” Mr Hockey says.

Modelling by Master Builders showed those who bought a median-priced house in Adelaide paid on average an additional $880 in interest on their loan each year as a result of the cost of stamp duty.

State Treasurer Tom Koutsantonis is expected to announce the Government’s decision on tax reform at the State Budget in June.

Mr Koutsantonis welcomed the input of the Federal Treasurer on the state’s tax reform discussion.

“It is highly embarrassing for the SA Liberal Party to see colleagues in Canberra having to step in and engage in SA’s Tax Review because Steven Marshall has failed to do so,” he said.

“Mr Marshall has refused to put in his own submission or raise an alternative vision on tax reform. This is because he has nothing to offer.”

In mid-2012 the Australian Capital Territory started a 20-year plan to abolish stamp duty. A new land tax structure was introduced this financial year, which includes a fixed charge of $900 and marginal rates based on property value.

Mr Hockey said a special meeting of treasurers in Alice Springs in August would further progress work in improving the tax arrangements between states and for the states.