Premier

Contributing A Fair Share For A Stronger Victoria

15 May 2021

The Andrews Labor Government will continue to invest in the services hard-working Victorians need as our people and our economy recover from the coronavirus pandemic.

The Victorian Budget 2021/22 will protect the state’s revenue base with $2.7 billion in targeted measures which will see those at the top make a larger contribution to funding the services the community needs, alongside a $3.6 billion program of initiatives to reprioritise government spending.

To help home buyers crack into the market, the Government will move to strike a balance between those wanting to buy their home and significant property investors who continue to profit from soaring property values.

When governments make planning decisions to rezone ex-industrial land, or create new residential estates, property developers can make massive windfall profits overnight.

A new windfall gains tax on these profits will claw back an estimated $40 million a year, ensuring these gains are shared with the community and invested in public transport, schools and other vital infrastructure.

Developers and speculators will face a windfall gains tax of up to 50 per cent applied to planning decisions to rezone land from 1 July 2022, ensuring multi-million dollar overnight profits are shared with the community.

The total value uplift from a rezoning decision will be taxed at 50 per cent for windfalls above $500,000, with the tax phasing in from $100,000 – ensuring the vast majority of land holders will not be affected. Land subject to the Growth Areas Infrastructure Contribution will also not be affected.

For too long, private gender-exclusive clubs have benefited from land tax concessions while discriminating against half the population.

From 1 January 2022, private gender-exclusive clubs will no longer receive the land tax concession reserved for charities, clubs and associations – bringing them into line with other private organisations liable to pay land tax on their landholdings.

Tax on large land holdings will increase, in a move which will raise more than $380 million per year on average for the community over the budget and forward estimates. From 1 January 2022, the land tax rate will rise by 0.25 percentage points for taxable landholdings exceeding $1.8 million and 0.30 percentage points for taxable landholdings exceeding $3 million.

In a move estimated to bring in an extra $137 million for Victorians next financial year, the Government will bring in a new premium stamp duty rate for property transactions with a value above $2 million, increasing stamp duty payable to $110,000 plus 6.5 per cent of the dutiable value in excess of $2 million.

This change is expected to impact less than 4 per cent of transactions.

From 15 April 2022, the Government will extend the point of consumption tax framework to keno taxation to ensure keno operators pay their fair share. Currently, companies licensed interstate can avoid paying tax in Victoria on keno products supplied online to Victorian customers.

Following an indexation freeze in 2020-21 to support businesses and households through the coronavirus pandemic, the annual indexation of fee and penalty units will also resume in 2021-22. From 1 July 2021, the penalty unit will increase by 10 per cent – from $165.22 to $181.74 – discouraging unlawful and unsafe behaviour. Fees will be indexed in line with inflation expectations.

The Government will ensure every dollar of investment is focused on delivering the services Victorians need, with a program of initiatives focused on reprioritising our efforts.

These measures will include reducing back office costs and spending on consultants. This will mean some workforce transition in Government will be required.

Government wages policy will be adjusted with a reduction in the guaranteed annual increase from 2 per cent to 1.5 per cent – which will ensure Victoria still has one of the most generous wages policies in the country and can continue to provide effective wage growth given the low inflation we are experiencing.

Departmental funding indexation will also be guided by actual inflation forecasts.

Quotes attributable to Treasurer Tim Pallas

“The pandemic has asked all of us to focus on the things that matter most – government is no different. We’ve invested in our health system to keep Victorians safe, and we’ve kickstarted our economic recovery with hundreds of thousands of new jobs.”

“It’s only fair that those making large profits return a reasonable proportion to the community – this means more Victorians can have the schools, hospitals and support they need and deserve.”

“Our tax system is fair and progressive – making sure that everyone pays their fair share to support Victoria’s economic recovery.”

Reviewed 15 May 2021

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