Wealthy Property buyers & Owners Targeted by VIC Government
Wealthy Property buyers & Owners Targeted by VIC Government
Treasurer Tim Pallas has announced $2.7 billion in measures that will see developers and other wealthy landowners make a larger contribution compared with those at the bottom and middle of the wealth scale. This is coming as a result of next week’s 2021/22 state budget. Victoria’s richest property owners will be left to deal with the new taxes to boost the state’s economic recovery out of the coronavirus pandemic. Industry groups said the tax changes will impact land prices and homebuyers at all levels.
The pre-budget announcement could invite accusations that Mr Pallas is waging a class war, and it is certain to prompt a ferocious response from the state Liberal opposition, which has long criticised the Andrews government as running the nation’s highest-taxing jurisdiction.
This update has drawn quick reactions from key stakeholders. Opposition Leader Michael O’Brien lambasted the government’s new tax hikes, saying it was “taking a baseball bat” to Victorians’ finances.
It was “economically reckless”, he said, and would hurt small businesses.
Victorian Treasurer Tim Pallas spoke with reporters on Saturday, he said “At the top end of the market there is a capacity for this industry to make a contribution not only to the wellbeing of the community but also restitution for the investment the state put into their industry when they needed it,” Noting that dwelling prices were more than 50% higher than a decade ago, with the strength in prices expected to continue over 2021.
David Harrison, CEO/Managing Director of Charter Hall Group said the tax rises came in at a wrong time. “The timing couldn’t be worse when we are trying to encourage business investment and employment to help with the recovery, at time when governments, both state and national, need the recovery to help fund the deficits they’ve created,”
The Victorian Chamber of Commerce also shared their concerns in relation to increases in stamp duty and land tax. “People will be disincentivised to invest in things like factories and shop fronts while it will also have a negative impact on the residential property market as people will be reluctant to upsize considering the huge tax implications for doing so,” chief executive Paul Guerra said.
“It will drive up house prices in the $2 million plus category overnight.”
TAX INCREASES
Thursday’s state budget will include:
- LAND TAX TO RISE : $1.5b over four years from January 2022
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.
- STAMP DUTY: $761m over four years from July 2021
Property transactions with dutiable value above $2m will be subject to a “premium” duty rate of 6.5 per cent.
- NEW WINDFALL GAINS TAX: $124m over four years from July 2022
New tax of 50 per cent for windfalls on rezoned land worth more than $500,000.
- FINES AND FEES: $251.6m over four years from July 2021
Penalty units rise 10 per cent, from $165.22 to $181.74, on traffic infringements and court-imposed penalties.
By many accounts this new Tax Take is a regressive approach to rebuilding one of the countries economic powerhouses post pandemic and post countless other blunders in the VIC state spending. Its worth reminding ourselves that a good proportion of the wealthy property owners are small & medium businesses also part of the largest employment group in the country.. This is very risky business, even for the Andrews Government.