NSW Labor has drawn fire from business and the federal government by planning to extend taxes on business the state has been promising to scrap for more than 15 years.
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On Thursday, opposition leader Luke Foley announced that an elected Labor government would tear up a promise by the Baird government to abolish stamp duty taxes on businesses.
Keping the taxes another ten years will net about $5 billion or half the money needed to fund Labor's infrastructure spending.
The head of the NSW Business Chamber, Stephen Cartwright, led criticism from the business world by calling the plan an "attack on jobs".
Mike Baird committed to abolishing the taxes from 2016, after the state has spent the better part of two decades fobbing off the federal government with broken deadlines and – the Commonwealth would argue – promises to abolish them.
Shadow Treasurer Michael Daley said he would have preferred to keep with the plan to abolish the levies, but was "left with no option after Tony Abbott stripped away $25 billion from the state" in new health and education agreements.
The taxes apply to business transactions, mortgages and shares. Whenever a business is sold, much of its value is subject to a tax of up to five per cent on any plant and equipment and "good will".
The business chamber argues this is a disincentive for businesses to restructure or merge and makes it harder for local businesses to compete with Queensland and Victoria, where they have been abolished.
"Both sides have been guilty of dragging their feet on these nuisance taxes," said Glenn Byres, of the NSW Property Council. "Every government of every flavour has said they should go. It just adds to the cost of doing business".
The dispute over the taxes dates back to 1999, when the federal government remade the way tax was distributed after the GST was brought in.
The commonwealth wanted the GST to replace state taxes which they viewed as a drag on the economy. But NSW proved reluctant to give them up, prompting a long feud with then-federal treasurer Peter Costello.
NSW denied claims by the federal Treasurer that they ever agreed to abolish the taxes in 1999. A 2005 deadline was further extended before being delayed indefinitely.
A spokeswoman for federal Treasurer Joe Hockey said: "The NSW Labor Party's only plan is to hike up taxes".
