Victorian taxpayers slugged billions more because of Covid debt levy

Victorian taxpayers have been slugged an extra $4.5 billion in the past year, primarily driven by the state government’s controversial levy introduced to drive down its Covid debt.

Premier of Victoria Jacinta Allan. Picture: Getty

Victorian taxpayers have been slugged an extra $4.5 billion in the past year, primarily driven by the state government’s controversial levy introduced to drive down its Covid debt.

At a time when Victorians are crying out for tax relief, the Allan government boasts that its extra charges on families and businesses are driving down debt to deliver a better than expected annual financial year report.

New figures tabled in parliament on Friday revealed net debt fell to $133.2bn in June compared with $135.9bn estimated in the May budget.

The government said the result reflected a higher than forecast net operating cash surplus, reporting an operating deficit of $4.2bn in 2023-24 compared to $8.8bn the previous year – a $4.6bn improvement.

But the result, the government conceded, was “primarily due to an increase in revenue, mainly driven by an increase in taxation revenue due to the commencement of the Covid Debt Levy in 2023-24”.

The new levy, introduced by the state government to pay down the state’s mammoth pandemic bill, includes ramped up land tax and payroll tax.

According to the report, the government reeled in $36.9bn this year compared to $32.35bn in 2023 – a $4.5bn increase.

Melbourne CBD business owners struggled during Covid lockdowns and afterwards. Picture: David Caird

The extra cash was also driven by higher goods and services tax (GST) grants from the Commonwealth due to Victoria’s growing population.

Victorian Chamber of Commerce and Industry Chief Executive Paul Guerra said the government urgently needed to deliver a plan to “reduce debt, stimulate business growth, solve for lower energy prices and reliability, reduce taxes and fix the housing crisis”.

“Victoria has a significant debt issue – that is not new – and in response, business confidence has started to suffer,” he said.

But the government, in a statement on Friday, said the financial update showed it was “delivering a strong economy and a record number of jobs”.

“Employment increased by 3.5 per cent in 2023-24, the second highest growth in Australia, and wages increased by 3.6 per cent, the fastest rate of nominal wages growth in over a decade,” it read.

“Unemployment averaged 4.0 per cent in 2023-24 – well below the 6.7 per cent unemployment rate left by the former Liberal National Government.”

The Allan Labor government boasts that its extra charges on families and businesses are driving down debt to deliver a better than expected annual financial year report.

Acting Treasurer Danny Pearson said the figures were proof that the government’s “fiscal strategy is working”.

“We’re delivering the services and infrastructure Victorians rely on while reducing debt and growing our state’s economy,” he said.

But Shadow Treasurer Brad Rowswell said the financial update “confirms Victoria’s economy continues to deteriorate under the Allan Labor Government”.

“The report also confirms that Victorian Labor has received $2 billion more in taxes than they budgeted for,” he said.

“Instead of lowering taxes, Victoria continues to have the highest state taxes in the country.”