Victoria Premier Daniel Andrews explained on Saturday that taxes are rising in the state in order for his government to deliver more than what was promised – and not to fill a $5.2 billion revenue void.
The anticipated increases form part of the recently-revealed Victorian budget, which was delivered by Treasurer Tim Pallas on Monday. Pallas’ announcement marked his fifth budget and the first of the Andrews government's second term. The fiscal plan was delayed by a month due to the federal election.
Andrews explained the decision on the day before the delivery of the budget. At the same time, he reaffirmed that the budget will have a surplus and is set to pay for all of his election promises.
“We’ve always been focused on having that buffer, you run those surpluses, and you promise within your means so that if you do have a write-down in revenue or you have unexpected expenditure you’re still able to deliver on your promises,” Andrews told reporters. “Yes there’ll be some additional revenue coming in from some fairly modest changes to the tax system that affect a very small number of Victorians and some people who are not Victorians but buy property here and that allows us to go beyond the promises we made to do even more like the billion dollars we announced in prisons on Friday.”
Foreign property investors to face hurdles
The foreign investor duty will rise from 7% to 8% from July 01. Nearly 3,000 foreign owners, meanwhile, will have to grapple with a rise in the absentee owner tax — up from 1.5% to 2%.
Additionally, about 1,700 metropolitan Melbourne property owners will have to pay land tax on the vacant blocks they own next to their homes unless they pay nearly $600 to consolidate titles.
A land tax exemption will be abolished for land that is next door to a person's home but on a separate title and without a separate residence, according to a report by ABC News. The government said that it is putting an end to the exemption to discourage land banking.
Revenue forecasts from stamp duty have been revised down by $5.2 billion since November on the back of a cooling property market.
Pallas also said that Victoria posted the biggest 12-month decline in property prices in the state's history over the past year.
The government forecasts steady growth in stamp duty revenue from 2020-2021.
