Property industry savages new tax regime, warns on affordability - The Age

Property industry leaders have criticised planned hikes on stamp duty and land tax in this week’s Victorian state budget as “short-term gain for long-term pain” that would worsen housing affordability, as Treasurer Tim Pallas insisted it was fair to ask those who had benefited from surging values contributed more to repairing public finances.

The Victorian government announced its plan to lift property taxes in Thursday’s state budget on Friday night as a way to raise $2.4 billion for the state over the next four years. The move sparked an immediate and sharp response from the property industry.

Developers and land speculators who reap windfall gains when their property is rezoned will be hit with a 50 per cent tax if the gain is worth $500,000.

The brunt of the new tax increases would be worn by landlords, with the state’s land tax haul to lift by more than 10 per cent, and stamp duty to raise $761 million by adding a premium to stamp duty payments for property transactions valued at more than $2 million.

Treasurer Tim Pallas said on Saturday that the changes were about “making sure that everyone pays their fair share to support Victoria’s economic recovery,” and that “more Victorians can have the schools, hospitals and support they need and deserve”.

“We need to grow our economic recovery from the bottom and the middle out, and that’s exactly what this budget is seeking to do, it’s seeking to target those who need help with the support they need, and seeking to make sure that those who have the capacity, who are making substantial profits at the moment make a modest contribution to the wellbeing of our community,” he said.

“I’ve never been one to simply increase a tax simply for the thrill of it.”

Addressing the increase in the land tax, Mr Pallas said the lift was modest “compared to the spectacular returns over the past 10 years and over the past six months”.

“The land tax rates will apply really for high value land, about $1.8 million in value, so we’re not talking, about somebody who’s struggling with a single property that they’re putting into the marketplace,” he said.

“I would make the point that the property industry was more than happy to accept the tax gifts that the state provided to them, to assist them through a very difficult period.”

Property Council executive director Danni Hunter.Credit:Joe Armao

The government will also hike the penalty unit amount by 10 per cent in a move that will see those caught using a mobile phone while drive will be fined $545 and the first level of speeding fines lift to $227.

Danni Hunter, the executive director of the Property Council of Victoria, said the “lazy, inefficient taxes” would make it less attractive to create new housing which is desperately needed to keep housing prices affordable.

“Tax hikes will cheat Victorians out of the economic recovery we are just starting to enjoy,” she said.

“Victoria’s competitive advantage will be lost to other Australian cities like Brisbane and Adelaide where state governments are rolling out the red carpet to welcome new investment because they know it’s good for jobs.”

Urban Development Institute of Australia in Victoria chief executive Matthew Kandelaars said the new measures were not targeted at the ultra-rich and would be passed down to “hurt Victorian families at every level of the housing market”.

“The truth is, house prices are high and rising because government taxes, charges and levies are high - a situation made even worse by today’s announcement,” he said.

“This is a classic case of short-term gain causing long-term pain - it’s a sugar hit that will lead to a bellyache.”

In another measure, the Victorian government says it would strip $1 million in land tax concessions from private men-only clubs, saying gender-exclusive establishments have been getting tax breaks meant for non-profit groups “while discriminating against half the population”.

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2021-05-15 00:36:28Z
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