Parliamentary Budget Office report reveals Victoria as highest taxing state

Treasurer Tim Pallas denied claims Victoria was the “highest-taxing state”, but a new budget office report has found otherwise.

Victoria is officially the highest-taxed state in the nation, according to new analysis by the state’s independent budget watchdog.

A report by the Parliamentary Budget Office contradicts claims by Treasurer Tim Pallas last week that Victoria is the “lowest-taxing state”.

It shows that in 2023-24, the state government will collect an average of $5074 in state taxes per person.

That compares with $4707 in NSW, $3647 in Queensland, $2970 in South Australia and $2900 in Tasmania.

As a percentage of gross state product, Victoria is also leading all other states, with Victorian taxes now 5.8 per cent of GSP, higher than NSW at 5 per cent, Queensland at 4.4 per cent, South Australia at 3.9 per cent and Tasmania at 3.8 per cent.

Victorian treasurer Tim Pallas denied claims Victoria was the highest-taxed state last week. Picture: David Geraghty.

The Australian Bureau of Statistics last month published data showing Victorians paid more in state government and local council charges than people in any other state.

Government and councils pocketed an extra $7.3bn in land tax, stamp duty, rates and other charges this financial year.

The total collected by state and local government was $36.9bn – up from $29.6bn the year before, a staggering 24.6 per cent increase.

The PBO report is based only on state taxes.

Speaking at a post-budget lunch, Mr Pallas said constant reports about Victoria’s tax take were incorrect because they failed to consider the royalties from the commonwealth or GST share, which reduced the burden on other states.

“If I could dispel the myth that Victoria is a high-taxing state,” he said.

“In fact, we are not. In fact, in many ways, ­depending on how you look at the data, we are the lowest-taxing state.”

But the PBO report squarely contradicts this assertion.

“Between 2023-24 and 2025-26, and across the forward estimates more broadly, all states are forecast to increase tax revenue per person,” it said. “Only NSW, Queensland and Western Australia are forecast to ­increase tax revenue as a share of GSP.

“Despite this, Victoria’s tax revenue per person and as a share of GSP is forecast to be the highest of all states from 2023-24 to 2025-26.”

Last week’s budget showed the state’s tax revenue is on track to climb to $40bn – double what it was in 2015-16.

Victorians also paid more in state government and local council charges than people in any other state, the report found. Picture: Luis Enrique Ascui

New Covid-19 debt levies are expected to raise $8.6bn, however, just $3bn will be wiped from the forecast debt levels which are set to skyrocket to $171bn – almost $70,000 for every household – by 2026-27.

Interest payments to service the debt are forecast to peak at $22m a day.

Opposition spokesman Brad Rowswell, said Victorians were being punished for Labor’s financial incompetence.

“At a time when families are experiencing unprecedented cost-of-living pressures, Victorians are paying the highest state taxes in Australia,” he said

“The state budget has introduced even more taxes in the form of a schools tax, rent tax and job tax when Victorians can least afford it.”