Housing supply is a bigger problem for Victorian renters than land tax changes announced in the budget, the state’s premier says.
About $4.7 billion will be recouped from roughly 860,000 Victorian investment, holiday home or business property owners under the tax changes announced in Tuesday’s budget.
The tax increase is part of the government’s 10-year, two-part levy to help repay $31.5b in COVID-19-related debt.
The Real Estate Institute of Victoria says the changes will only worsen the growing rental crisis in the state.
But Premier Daniel Andrews said a lack of housing supply rather than land tax was driving up rents.
“We need to do better. We need to do more in terms of getting more supply into the market,” he told reporters on Wednesday.
Mr Andrews said the government would hand down a housing statement in the coming months to address the lack of available homes.
He also said land tax was fully tax-deductible for some landlords, depending on how their affairs were arranged.
Along with the changes to land tax, Victorian businesses with national payrolls above $10 million – or five per cent of the state’s employers – will pay an additional 0.5 per cent in payroll tax from July 1.
Businesses with a national payroll above $100m will also pay one per cent in additional tax, with the move expected to raise $3.9b over the forward estimates.
About 110 high-fee private schools will be stripped of their longstanding payroll tax exemption to glean $422.2m over the next four years, while up to 4000 public sector workers will lose their jobs as the government eyes $2.1b in savings.
Industry and advocacy groups have lined up to condemn the measures designed to stabilise net debt, which is projected to hit $171.4b by mid-2027.
Victorian Chamber of Commerce and Industry chief executive Paul Guerra said the government was using property owners and medium and large businesses as an ATM to pay off the debt.
Australian Retailers Association chief executive Paul Zahra suggested the new and increased taxes would likely lead to job losses and higher prices for customers, further fuelling cost-of-living pressures.
Independent Schools Victoria chief executive Michelle Green said the removal of the tax-free exemption was likely to have a damaging impact on operations for many schools, causing disruption for students.
But Mr Andrews maintained the changes were necessary to drive down debt incurred during the pandemic.
“There’s always choices to be made and the balance to be struck,” he said.
Opposition Leader John Pesutto acknowledged the government needed to reduce debt but suggested that could be achieved through cutting infrastructure spending waste rather than targeting employers, schools and people with a property nest egg.
“Victorians are being punished for the incompetence of the Labor government,” he said.
“It’s mean, it’s nasty and it targets people on middle and low incomes, as well as the big end of town.”
Prime Minister Anthony Albanese said he was confident Premier Daniel Andrews could rein in Victoria’s mounting debt without the help of his government.
“They have done an enormous amount to invest in infrastructure. The Victorian economy is growing again,” he told Seven’s Sunrise.