A controversial state land tax on powerlines is set to add almost $250m to Victorian energy bills

A sneaky state tax collected on land used for high voltage power lines is set to add almost $250 million to household and business energy bills.

The Energy Users Association of Australia says the extra costs are salt in the wounds of every Victorian struggling with rising cost of living.

A sneaky state tax collected on land used for high voltage power lines is set to add almost $250 million to household and business energy bills.

The annual land tax grab has soared $56m in just 12 months because it is based on valuations done during last year’s property price boom – exacerbated in regional areas due to an influx of tree-changers fleeing Melbourne during the pandemic.

Industry and consumer groups have slammed the “sneaky and deceptive” tax, which was set up in 2004 to cover a subsidy for aluminium smelters and is now just used to fill government coffers.

They also fear that costs could soar even higher once new voltage lines are strung across western Victoria to connect renewable energy to homes and businesses.

Energy Users Association of Australia chief executive, Andrew Richards, said the extra costs were salt in the wounds of everyone struggling with high costs, but he worried about what was ahead.

High voltage power lines cross the Melbourne suburb of Bundoora. Picture: Aaron Francis

“It’s not just easement costs, what else is going to be hidden in bills? It’s sneaky and deceptive that’s what it is,” he said.

“A quarter of a billion dollars a year, it’s almost 40 per cent of transmission costs on your bill now.”

Mr Richards said big energy users bore the brunt of the extra costs that are passed straight through to bills, meaning the portion of new contracts that can be negotiated in a competitive market has shrunk.

Victorian head of the Australian Industry Group, Tim Piper, said the tax was a quick fix for the Bracks Government in 2004 but was now “old enough to vote” and “just keeps getting bigger”

“If the State won’t cut the Easement Land Tax back, at least they could apply it to the benefit of energy users,” he said.

“Victoria just proposed ongoing payments to landholders hosting the new transmission lines our State so badly needs.

“That’s sensible, but why not cover the cost of those payments from the tax Victorians are already paying on transmission?”

Policy manager at social services group Vinnies, Gavin Dufty, said while the tax might only add $30 or so to bills: “in a cost of living crisis every little bit counts”.

“It might not look a lot, but for some households it’s the difference between putting food on the table that night, or not.”

A government spokeswoman said: “We know the rising cost of living is making it harder for families to make ends meet, and that’s why Victorians this month can get a new payment of the $250 Power Saving Bonus.”