Victorian Treasurer Tim Pallas says next week’s state budget will include tax increases and public sector savings as the government takes the “hard and necessary actions” needed to rebalance the books.
Mr Pallas said $2.7 billion would be raised by a suite of measures including an increase to land tax for taxable properties worth more than $1.8 million.
The Treasurer said the “modest” increase would only affect a fraction of the 10 per cent of Victorians who pay land tax, which is not paid on owner-occupied homes.
“All up, we invested $49 billion in the last budget to support families and businesses through the pandemic using our balance sheet,” Mr Pallas said.
“Now, we’re taking all the hard and necessary actions to make our tax system fairer and more progressive.”
The changes will see the land tax increase by 0.25 per cent for taxable land holdings between $1.8 million and $3 million, and 0.30 per cent for taxable land holdings in excess of $3 million.
A new windfall gains tax will be also introduced for properties whose value is boosted by a council rezoning.
The tax will only apply to properties where the value is boosted by more than $100,000, with a 50 per cent tax on windfalls above $500,000.
Mr Pallas said the move would claw back around $40 million a year from developers and speculators who made huge profits after a local council’s “stroke of a pen” to rezone industrial land for residential use.
“There needs to be a balance between those wanting to buy their first property and large property investors who continue to profit from soaring property values,” he said.
A premium stamp duty will also be introduced, with property transactions above $2 million attracting a $110,000 duty plus 6.5 per cent of the dutiable value in excess of $2 million.
Property industry decries ‘greedy tax hike’
Real Estate Institute of Victoria president Leah Canlan said the proposed changes were the latest in a long line of hits to the property sector during the pandemic.
“Commercial property management and residential property management have been decimated,” she said.
“There’s high vacancy, there’s lots of unpaid rent and this is just another effective tax that those property investors now have to manage.
“We don’t want to see Victoria become the state no one wants to invest in and with additional taxes for the property sector, that’s where we’re heading.”
Danni Hunter, the Victorian executive director of the Property Council of Australia, said the property industry already contributed more than half of the state government’s tax revenue.
“This is a greedy tax hike on the industry that is building Victoria’s recovery,” she said.
Mr Pallas said the budget measures were not about trying to divide the community, but asking those who had the ability to contribute more to the state’s recovery to do so.
“The property industry, who are making very substantial profits at the moment, do have … an obligation to the rest of the community around fairness and cohesion,” Mr Pallas said.
Article taken from abc.net.au