Parliamentary Budget Office figures show expanded land tax scheme is set to rake in $5.5bn

The Allan government’s land tax, known as the Covid debt levy, will rake in almost $1bn more than initially stated, with property owners to begin paying the tax this week.

The opposition says the Parliamentary Budget Office report shows Labor ‘simply cannot manage money’. Picture: iStock

A deeply unpopular land tax, which up to 380,000 Victorians will begin paying for the first time this year, is expected to claw back almost $1bn more than initially stated.

New figures from the Parliamentary Budget Office, obtained exclusively by the Herald Sun, reveal the Allan government’s expanded land tax scheme is expected to rake in $5.5bn over the forward estimates.

But the government’s own modelling in the 2023-24 budget papers had predicted the tax – known as the Covid debt levy – would only deliver $4.7bn in that same period until 2027.

According to the PBO figures, the 380,000 newly liable properties are each expected to cough up $878 on average each year.

The Allan government’s expanded land tax scheme is expected to rake in $5.5bn over the forward estimates. . Picture: David Caird

More people will begin paying the tax from this week after the government slashed the tax-free threshold of $300,000 to just $50,000.

The fixed charge levied on land tax bills for property owners will start at $500 for a parcel of land worth $50,000-$100,000.

Owners of land worth more than $100,000 face a $975 fixed charge, and an extra payment for those with property values higher than $300,000.

The government has spruiked this as a necessary measure to recoup money and pay down the state’s Covid debt.

But despite the new tax hike, Victoria’s financial woes continue to worsen, with state debt set to blow out to a staggering $178bn by 2027.

Last month’s budget update revealed the dire figure had blown out by another $6.4bn, with Victorians now slugged $24m a day in interest payments alone on the debt.

Opposition Leader John Pesutto said it was “inevitable” Victorians would be hit with more taxes given multibillion-dollar blowouts on major projects.

“Under Labor, life continues to get harder for Victorians across the state,” he said.

“Renters, homebuyers and Victorians with the most modest of landholdings which serve as retirement nest eggs shouldn’t be the ones to pay for the financial mismanagement of the Labor government.”

Shadow treasurer Brad Rowswell said the PBO report provided “further evidence that Labor simply cannot manage money”.

“Victorian households are battling to make ends meet and instead of making life easier, Labor continues to increase taxes and charges to pay for their own financial mismanagement,” he said.

A government spokesman said: “The Covid debt levy is temporary, targeted and above all, responsible. It will help to pay off the Covid emergency credit card we used to save lives and protect family budgets while we continue to invest in jobs and the projects that build our state.

“The land tax levy applies primarily to those who own a second property or multiple properties. The family home remains exempt from land tax.”