Dominic Perrottet's pet policy aimed at kickstarting stamp-duty reform is being examined after passing through the first chamber of NSW parliament.
The premier wants to begin a trial in January of an optional land tax for first-home buyers who want to avoid the high up-front costs of stamp duty.
The opposition says that's too close to the state election and voters should get to decide.
Labor has smeared the plan as introducing a "forever tax" on the family home, warning the trial is just the beginning and won't end with a choice for first-home buyers.
Revenue NSW deputy secretary Scott Johnston told the hearing on Thursday that government agencies are preparing for the scheme to begin in January.
"We are confident if the bill is passed Revenue NSW is well placed to implement it," he said, adding that the agency had worked closely with Treasury in designing its implementation.
Revenue's executive director of property reform implementation, Nick O'Reilly, says customer feedback indicates people will opt for the land tax if they have the choice.
"Feedback from customers was about the interest in having choice, and the scheme allows them to choose," Mr O'Reilly said.
"I think they'll look at case-by-case scenarios ... potentially with professional input."
Solicitor Joanna Seve says the bill's methods for calculating how much tax will be paid is confusing, complicated and potentially unworkable.
"It's not enough that there be a computer program out there, the calculations need to be verifiable, to be verifiable they need to be understandable," Ms Seve told the hearing.
She suggested amendments be moved in the upper house to address "loopholes".
However, Ms Seve said stamp-duty bracket creep had contributed to affordability issues and should be reformed.
"If these matters were to be addressed it would make a significant impact across the board on the economy," she said.
The NSW Tenants Union supports land taxes, although CEO Leo Patterson Ross does not expect the trial to bring down house prices or rents for tenants.
"We have supported a broad-based land tax for many years, we see it as fair and efficient," he said.
"It discourages behaviour such as land-banking and leaving properties vacant."
McKell Institute chief executive Michael Buckland said there was initially great hope for the move to land tax.
"It's been walked back, probably so much so that it does not achieve a lot of the benefits it was originally intended to receive," Mr Buckland said.
The scheme should not be limited to first-home buyers and would not bring down property prices, he said.
"It would only put upward pressure on prices," he said.
Buyers would also use the savings from not paying stamp duty to get bigger loans for a more valuable property, leading to bigger mortgage repayments and likely larger annual land taxes, he said.
Instead, all homebuyers should be offered the land-tax choice, and then the property should be locked in to the tax to gradually transition all homes, Mr Buckland said.
The committee is expected to report next week.
