Soaring land taxes hit business and landowners, but fill state budget coffers

Soaring land taxes are hitting Victorian landowners and businesses hard, including one Melbourne coffee institution which fears for its future.

Soaring land taxes are hurting Victorian businesses and property owners, as the state government grabs an extra $730 million for the budget coffers this year.

Land tax bills are now being sent out, many delivering annual increases of tens of thousands of dollars.

The jumps follow property revaluations last year on the back of Melbourne’s soaring land values.

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The $250,000 threshold has remained unchanged for a decade, forcing more landowners to pay the state levy. It does not apply to people’s primary homes.

Melbourne coffee institution Seven Seeds is facing a 100 per cent increase for the second year in a row — up to $80,000 annually — for its landmark cafe in Berkeley St, Carlton, threatening its future.

Mark Dundon, co-founder of Seven Seeds cafe in Melbourne.

Mark Dundon, who founded Seven Seeds a decade ago with Bridget Amor, said his leased property was upgraded to “capital one” zoning, pushing up its valuation and land tax.

“It’s tough. We can’t afford to pay this sort of money,’’ he said. “We may have to look for another site but do we want to be in the foyer of a 22-storey student accommodation block?’’

REIV chief executive Gil King said Victoria needed a competitive property tax regime to encourage investment and jobs.

Land tax revenue was forecast to continue increasing at rates well above CPI, he said.

“The tax thresholds have not been adjusted since 2008-09 when property prices were much lower.’’

The state’s land tax revenue is expected to jump to $3.09 billion this year, up from $2.36 billion in 2017-18.

Treasurer Tim Pallas said the state government was making land valuations fairer and more consistent following work with councils.

“We have introduced annual valuations in line with the rest of the country, which will start happening midway through this year,” Mr Pallas said.

Melbourne coffee institution Seven Seeds is facing a 100 per cent increase in land taxes for the second year in a row.

Sunshine dentist Burt Kuran said small businesses were copping the increases ­either through direct bills or passed on in their rent.

“Rents are going up and those costs will be passed on,” he said.

Rising land tax bills also played a part in the closure last year of Modak Motorcycles, a Melbourne institution on Elizabeth St, after 80 years.

The land tax increases come as the state’s property market downturn has slowed stamp duty returns, threatening to wipe hundreds of millions from the state Budget.

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