Developers and wealthy landowners are set to be slugged with higher taxes in Victoria as the state seeks to raise billions of dollars in new revenue.
In its latest announcement, the Victorian Government says the state’s upcoming budget will include $2.7 billion worth of targeted measures which it says will see wealthier Victoriana make a larger contribution to funding the services which the community requires.
As is relevant to the property sector, key measures includes:
- A 19 per cent increase in land tax on properties valued at between $1.8 million and $3 million, with the rate to increase from 1.3 to 1.55 percent
- A 13 per cent increase in land tax on properties valued at more than $3 million, with the rate to increase from 2.25 per cent to 2.55 percent
- An 18.2 per cent increase in stamp duty on a property’s value above $2 million, with the value up to $2 million to be taxed at the current rate
- A new Windfall Gain Tax, which would apply from 1 July 2022, where 50 per cent of the value of uplift as a result of a rezoning (both local government and state government), as assessed by the Valuer General at the time of the rezoning.
In a statement, Victorian Treasurer Tim Pallas argued that the moves were necessary to ensure that wealthier Victorians contribute their fair share toward government service provision.
“The pandemic has asked all of us to focus on the things that matter most – government is no different. We’ve invested in our health system to keep Victorians safe, and we’ve kickstarted our economic recovery with hundreds of thousands of new jobs,” Pallas said.
“It’s only fair that those making large profits return a reasonable proportion to the community – this means more Victorians can have the schools, hospitals and support they need and deserve.”
“Our tax system is fair and progressive – making sure that everyone pays their fair share to support Victoria’s economic recovery.”
But building industry lobby groups slammed the move, claiming that the moves would adversely impact housing affordability.
“This is a sucker punch to the industry that is building Victoria’s recovery. One in four Victorians work in property and the Victorian Government is raising taxes at a time when it should be creating jobs,” said Danni Hunter, Victorian Executive Director of the Property Council.
“This is a tax hike on the home ownership dreams of Victorians. We are heading toward a housing affordability crisis and the Victorian Government has fast tracked our way there by slugging homebuyers and businesses in this short-sighted move.”
“The Government knows the price for these tax changes will be paid by every single Victorian.
MBV CEO Rebecca Casson said the increases could be a disincentive to Victorian homeowners and investors, potentially affecting the future pipeline for the building and construction industry.