Victoria land tax bill surges $1b putting businesses under threat
Thousands of property owners in Victoria have seen bills for one crippling tax skyrocket, pouring almost $1 billion extra into state government coffers. Owners of well-known Melbourne family businesses fear they will face no choice but to sell.
VIC News
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Victorians are pleading for relief as new figures reveal the land tax take soared to $3.5 billion last financial year — crippling family businesses and the incomes of self-funded retirees.
Shock figures reveal the state government’s windfall from the levy has risen by $950 million since 2017-18.
Land tax is payable on any property valued at more than $250,000 that is not the owner’s principal residence.
One self-funded retiree told the Herald Sun they were scrambling to find an extra $30,000 to pay their tax bill this year.
Meanwhile, Brighton Savoy managing director Michael Lee said his 50-year family business — a venue and hotel accommodation on Brighton Beach — was at breaking point.
His bill has reached $238,000, up from $181,000 three years ago — an increase of 31 per cent.
“If it continues to increase at the rate it is going, we will have to sell,” he said.
State Revenue Office data shows the tax resulted in a revenue surge from $2.56 billion in 2017-18 to $3.51 billion last financial year.
The extra $950 million in just 12 months includes some property owners who say their bill rose by more than 10 per cent in a year, prompting warnings the tax was no longer feasible.
“Land tax is a cash cow for the state government,” Mr Lee, 49, said.
“We are getting very close to the point that we have to reassess whether it’s sustainable to keep going.
“If it continues to increase at the rate it is going, we will have to sell and it will be turned into a block of apartments.”
The latest assessment notices are now being sent out in relation to 510,000 properties in Victoria.
Tax experts have blamed bracket creep for the soaring tax, with the thresholds remaining unchanged for more than a decade.
The Victorian Government has repeatedly refused to move to reduce land tax rates, despite years of soaring property values.
In 2017, Treasurer Tim Pallas adopted yearly rather than biennially valuations to “reduce bill shock”.
But that has done little to provide actual tax relief.
Mr Pallas has defended land tax saying it was essential to the running of the state.
“Land tax revenue helps make sure the services and infrastructure that Victorian families count on are delivered,” he said. “Annual valuations bring Victoria into line with the rest of the country and help to reduce bill shock.
“As a result of the move to annual valuations, the majority of taxpayers will see a decrease in their 2020 land tax assessment.”
Land tax provides a large portion of income for Victoria and with the Budget surplus being slashed by almost 40 per cent to $618 million in the latest update, it is unlikely the government will move to reduce rates.
Shadow Treasurer Louise Staley called for thresholds to be reviewed and warned the ballooning cost was far outweighing income.
“Thousands of Victorians face land tax bills higher than the rent received on their properties,” she said.
Following this year’s bushfires, the state government placed a hold on land tax assessments in some postcodes, while people offering free accommodation to those who need may be eligible for concessions.
LAND TAX REVENUE OVER THE PAST DECADE
| 2018-19 | $3.514 billion | up $954 million |
| 2017-18 | $2.560 billion | up $48 million |
| 2016-17 | $2.512 billion | up $719 million |
| 2015-16 | $1.793 billion | up $39 million |
| 2014-15 | $1.754 billion | up $94 million |
| 2013-14 | $1.660 billion | up $69 million |
| 2012-13 | $1.591 billion | up $189 million |
| 2011-12 | $1.402 billion | up $4 million |
| 2010-11 | $1.398 billion | up $220 million |
| 2009-10 | $1.178 billion |
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MILLIONS OF DOLLARS LEFT ON UNUSED MYKI CARDS
THE TOP PAYING LGAS IN 2013
MELBOURNE: $385.7m
BOROONDARA: $136m
PORT PHILLIP: $137.4m
STONNINGTON: $137.2m
YARRA: $129.7m
MONASH: $125m
WYNDHAM: $81.5m
WHITEHORSE: $82.4m
MORNINGTON PENINSULA: $76.6m
MORELAND: $74.6m
GREATER DANDENONG: $74.2m
CASEY: $70.5m
WHITTLESEA: $68.4m
GLEN EIRA: $64.4m
BAYSIDE: $60.5m
DAREBIN: $55m
BRIMBANK: $54.9m
GEELONG: $52.7m
HUME: $50.9m
MANNINGHAM: $57.1m
Source: State Revenue Office