Victorians hit with supercharged $46bn Labor tax grab, state budget analysis shows

Victoria’s tax take has grown faster than any other state or territory in the nation with residents and businesses forced to cough up an extra $46bn due to Labor tax hikes.

Victorians will be hit with a $46bn taxes gouge as the Allan government supercharges its tax rate.

An analysis of this week’s budget reveals Victoria’s taxes as a percentage of the economy, have grown faster than any other state or territory.

When Labor came to office in 2014, the government’s tax take was 4.6 per cent of the gross state product, but it has since grown to 6.2 per cent, where it is forecast to remain in coming years.

No other state or territory has had such a big increase, with Victoria’s 1.6 per cent hike double the national average.

It means the government will reap $41.7bn in taxes next year – $11bn more than it would if the tax burden to GSP ratio had been kept at the same level as when Labor came to power in 2014 and Dan Andrews became Premier.

Victorian Treasurer Jaclyn Symes delivers her first budget in the Victorian parliament on May 20. Picture: Getty

In total, the government will collect $179.2bn over the next four years, $46.2bn more than the $133bn it would have collected if the tax rate stayed at the 2014 level.

Independent economist Saul Eslake said forecasts indicate the total tax take in four years will be up 183 per cent compared to when Labor took office.

The state’s population has grown 30 per cent during that time and total inflation has been 49 per cent.

Mr Eslake said: “If you wanted the tax burden to remain steady as a proportion of gross state product, which allows for the effects of population and economic growth, and inflation, then total state taxation in 2024-25 would have been $29.3bn rather than, as forecast yesterday, $39.2bn, and if the same percentage were to hold for 2028-29 then total state tax revenue in that year should be $35.9bn instead of the $47.9bn forecast for that year.”

Premier Jacinta Allan defended the government’s huge tax grab as she spent Wednesday spruiking her budget while shrugging off concerns about ballooning debt.

Victorian Premier Jacinta Allan Premier Jacinta Allan has defended the government’s huge tax grab. Picture: Getty

Asked how she justified the fast rising tax take, Allan said “every single dollar” was being invested back into services and initiatives across Victoria.

Pressed over the billions of dollars being swallowed up by interest repayments to cover the state’s skyrocketing debt, which is on track to hit $194bn by 2029, Ms Allan said the money was all being invested into the Metro Tunnel, West Gate Tunnel, the North East Link and the Suburban Rail Loop.

“We are the only state in Australia to have a fiscal strategy, and the budget … confirmed that we are meeting what we set in that fiscal strategy, including delivering an operating surplus,” she said.

Asked about Victoria’s rising tax take on Thursday, Ms Allan instead sought to attack the Liberal Party, who haven’t been in power since 2014.

“When the Liberal Party comes out with the claims they’re making, what they’re really saying to those working people is that they’re not on their side,” she said.

“They (are saying they) would cut the cost-of-living support, they would cut into frontline services. That’s what the Liberal Party is saying today. Well we’ve taken a different path.”

Pressed further to answer the question about the taxes that her government is imposing on Victorians, Ms Allan said: “That investment is going back into supporting working people and families.”

That surplus is now expected to be $600m, down from an anticipated $1.6bn that was forecast in the government’s December budget update.

Treasurer Jaclyn Symes told a post-budget business lunch “I delivered a surplus this year” despite next year’s projected surplus being built into last year’s budget and government forecasts predicting a $3.4bn deficit this year.

Ms Symes conceded she wanted bigger savings in this year’s budget but was convinced otherwise by her colleagues saying: “I didn’t get my own way every time”.

Jaclyn Symes making her budget speech. Picture: Getty

But she said she believed she “got the balance right in this budget” and managed to juggle the priorities of her colleagues.

Multiple senior government sources have told the Herald Sun that at times tensions ran high between the offices of the Premier and the Treasurer in the lead up to the budget, particularly over a desire from Ms Symes to find more savings.

When she became Treasurer in December she said she wanted to forge a different path from her predecessor, Tim Pallas, who held the state’s purse strings for a decade.

But her first budget followed a similar path with net debt continuing to climb despite higher taxes and spending.

Former Victorian treasurer Tim Pallas was congratulated by ex premier Dan Andrews after delivering his May 2022 budget. Picture: Ian Currie

Sources said Ms Symes was overruled for “political reasons” citing next year’s general election and Labor’s attempt to win a historic fourth successive term in government.

“As a minister that’s had responsibility for a lot of portfolios … you want as much money as you can for your portfolios, you want to do great things,” she said.

“Now I’m a Treasurer, it’s like you can do great things but I just don’t want it to cost very much money.”

Ms Symes, who will fly to New York next month to meet with credit ratings agencies, also hinted at potential tax reform.

Shadow treasurer, James Newbury, said “Labor’s tax addiction is hurting Victorians but is also having a crippling impact on our State’s capacity for growth.”

‘The Budget lacked an economic plan, but it also doubled down on punitive taxes that are far outpacing household earnings,” he said.

Originally published as Victorians hit with supercharged $46bn Labor tax grab, state budget analysis shows