NSW is first to move to replace stamp duties with a land tax

And it will prove tempting to many.

The NSW government is leading the way with the replacement of the one-off stamp duty tax with an annual land tax.

Other governments have indicated they want to follow suit but are waiting on the Federal government to promise to meet any tax revenue shortfall while the tax transition continues.

And there is still the issue of farms being unfairly over-taxed through this annual cash grab because of their high property values.

NSW released the first details on its land tax through its Budget announcement on Tuesday as an inducement to first home buyers.

First home buyers can pay the upfront cost of stamp duty or the new annual property tax.

Available to homes valued at less than $1.5 million, these first home buyers will be charged $400 plus 0.3 per cent of the property's value.

In contrast, for a home of $1.5 million, a stamp duty of $67,375 would be charged.

Or for a $1 million home, the stamp duty would be $40,305.

With a $500,000 home, the charge is $17,805.

NSW, as does most other states, offer stamp duty exemptions as part of first home buyer schemes.

In NSW, it has kicked in below $650,000.

NSW Premier Dominic Perrottet said the initiative would remove one of the largest upfront costs first home buyers face buying homes at a time when they make up a declining share of market activity.

"In the past two decades, the share of first home buyers under 35 years of age has declined from 67 per cent to 61 per cent."

The Budget inclusion of the land tax is seen as the first move towards a land tax across all property sales.

A complete transition to land tax has been estimated to carry a 20 per cent hit to NSW government revenues compared with stamp duty tax.

Farm lobby groups want any debate over the scrapping of property stamp duty in favour of an annual land tax to exclude agricultural land.

Although stamp duty is collected by state and territory governments, it is on the agenda of a meeting of state treasurers with new federal treasurer Jim Chalmers in Brisbane on July 22.

The National Farmers' Federation has long feared the move away from stamp duty to a replacement land tax was "a concept that clearly has risks for Australian farmers who manage over 60 per cent of the Australian landscape".