- Plans announced to impose new taxes on Victoria’s richest property owners to aid the state’s economic rebound have been slammed by industry groups
- The land tax rate would increase by 0.25 percentage points for taxable landholdings worth more than $1.8 million and by 0.30 percentage points for any worth more than $3 million from January 1 next year
- Stamp duty on assets worth more than $2 million would rise from 5.5 per cent to 6.5 per cent, creating an average of $137 million each year
- Property groups are outraged at the announcement, with the Property Council of Victoria telling members in an email that they have “rapidly mobilised and fiercely taken up the fight against these senseless changes”
- HIA executive director Fiona Nield called the new taxes “short-sighted”
Plans announced to impose new taxes on Victoria’s richest property owners to aid the state’s economic rebound have been slammed by industry groups.
Treasurer Tim Pallas proposed the $2.7 billion measures ahead of the 2021/22 state budget, which will see developers and other wealthier homeowners contribute more in tax.
Among the changes, developers will be slugged with a new windfall gains tax on re-zoned industrial lands.
The government said developers and speculators can make massive windfall profits overnight from these deals, and the new tax will “claw back” an estimated $40 million a year.
Developers will face a windfall gains tax of up to 50 per cent applied to planning decisions to re-zoned land from 1 July 2022.
Large property assets will now face higher taxes, raising more than $380 million a year. The land tax rate would increase by 0.25 percentage points for taxable landholdings worth more than $1.8 million and by 0.30 percentage points for any worth more than $3 million from January 1 next year.
Stamp duty on assets worth more than $2 million would rise from 5.5 per cent to 6.5 per cent, creating an average of $137 million each year.
This change is expected to impact less than four per cent of transactions, according to the government.
The government also announced that from next year private gender-exclusive clubs will no longer receive the land tax concession reserved for charities, clubs and associations.
“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,” Treasurer Tim Pallas said.
“Our tax system is fair and progressive – making sure that everyone pays their fair share to support Victoria’s economic recovery.”
“We will fight this on all fronts”
Property groups are outraged at the announcement, with the Property Council of Victoria telling members in an email that they have “rapidly mobilised and fiercely taken up the fight against these senseless changes”.
“If their intent is to drive investment to other Australian cities who are rolling out the red carpet for investment and creating jobs, then this new tax will do it,” Property Council Victoria executive director Danni Hunter said.
“We will fight this on all fronts,” she said.
Hunter said the new tax was a “sucker punch to the industry”.
“This is a tax hike on the home ownership dreams of Victorians,” she said.
“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,” she added.
HIA executive director Fiona Nield called the new taxes “short-sighted”.
“New taxes like these are passed on in higher land prices for all and stamp duty inhibits people from selling properties to allow for new homes to be built – it has direct impact on new housing affordability,” she said.
“Changing the goal posts after property has been purchased is unfair. It seems this will particularly impact in regional Victoria – as some urban growth land in Melbourne may be exempted.
“The new windfall gain tax is particularly concerning and appears to take a disproportionate share of property value from landowners that are in fact helping to support the growth in housing supply that helps keep affordability in check across regional Victoria,” she concluded.