Victorian Treasurer Tim Pallas says next week’s state budget will include tax increases and public sector savings as the government 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.
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.
Proposed property tax changes
|Land Tax||Land tax will rise by 0.25 percentage points for taxable landholdings worth $1.8m-$3 m and by 0.3 percentage points for taxable landholdings above $3m.||$1.5b over four years from January 2022|
|Stamp Duty||Property transactions with dutiable value above $2m will be subject to a “premium” duty rate of 6.5 per cent.||$761m over four years from July 2021|
|New windfall gains tax||New tax of 50 per cent for windfalls on rezoned land worth more than $500,000.||$124m over four years from July 2022|
Source: Victorian government