Victoria hires debt collectors in $8m deal to chase spiralling tax debts

Victoria has signed an $8m deal with debt collectors to chase spiralling unpaid taxes, as overdue bills surge to more than a third.

Victoria has locked-in a new $8 million deal with a debt collector to chase down the spiralling number of unpaid tax bills, with more than a third of outstanding debts now 12 months overdue.

The State Revenue Office has confirmed it inked a new deal with a debt collector last month, which will aggressively go after the mounting unpaid debts being racked up by companies and households across the state.

It comes after Victoria has been labelled the worst taxed state, and the Department of Treasury and Finance 2024-25 annual report tabled last week revealed that there had been a massive jump in unpaid taxes.

A debt collector will aggressively go after mounting unpaid debts being racked up by companies and households across the state.

It said debts not paid in 12 months had jumped to more than a third, a blow out above expectations due to “significant increases experienced in aged debts both during, and post-COVID-19, particularly in relation to 2022, 2023 and 2024 Land Tax assessment cycles and more recently as a result of increases in the customer base and tax assessed”.

In November, the Herald Sun revealed one-third of unpaid land tax bills were now more than 12 months overdue, with the government set to crack down on defaulters.

The state government hit an estimated 380,000 properties with new land tax levies in last year’s budget – an average of up to $878 a year to pay for its Covid handouts.

Increased state taxes and levies have been a feature of recent Victorian budgets including the new ESVL unveiled under Treasurer Jaclyn Symes. Picture: Getty

Victoria hiked land tax in 2023 to help pay down the debt incurred during the pandemic, it also reduced the tax-free threshold from$300,000 to $50,000, meaning thousands of Victorians were no longer exempt from paying.

This has been matched with increased payroll taxes, an expanded congestion levy and the controversial new Emergency Services Property Levy announced by Treasurer Jaclyn Symes, which will reap an additional $2bn from households and businesses over the forward estimates.

Shadow treasurer, Jess Wilson, said the state’s move to bring in a debt collector was a clear sign it was struggling with “Victoria’s net debt growing by $2 million an hour”.

“These overdue bills are a result of Labor’s mismanagement and ever-increasing taxes which, in many cases, have been incorrectly issued or at inaccurate valuations,” she said.

“It should be no surprise Labor has engaged debt collectors to chase up every single tax dollar it can.”

Shadow treasurer Jess Wilson says the state’s skyrocketing tax haul is hurting Victorians. 2025. Picture: David Crosling

An SRO spokesperson said the contract was justified.

“The SRO actively engages with customers who have unpaid state taxes using a range of methods – such as emails, letters and phone calls – to seek payment in full, or to set up a payment arrangement,” it said.

“If this is unsuccessful, we may take further action including initiating external debt collection services.

“Our approach aligns with standard industry practices in Australia and globally.”

The contract with the new debt collector will last from October 1 this year to September 30, 2029.

Just last week The Herald Sun revealed the state was applying to have overdue land taxes added to mortgages through the bank.

The SRO said it was one of the ways the state had recouped debts since 1910.

Originally published as Victoria hires debt collectors in $8m deal to chase spiralling tax debts