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Property tax hikes to hold back property and investment markets

The Victorian Chamber has today voiced its concerns over reports that the State Government will increase stamp duty and land tax next year.

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The proposed property tax increases will mean that Victorians pay 0.25 per cent more land tax on investment properties valued at more than $1.8 million and 0.3 per cent more for properties valued at more than $3 million.

The stamp duty slug means that purchasers will pay 6.5 per cent stamp duty (up from 5.5 per cent) on properties valued at $2 million. On a $3 million property, the stamp duty payable is currently $165,000; that would increase to $175,000. The median house price in metropolitan Victoria is currently $1,004,500.

What was missing from today’s announcement was the Government undertaking a genuine structural economic reform to replace stamp duty with a fairer and more efficient property tax. Such a change would lead to significant economic growth and greater equality in the housing market. ThVictorian Chamber will continue to lead the advocacy on this important economic reform.

 

To be attributed to Victorian Chamber of Commerce and Industry Chief Executive Paul Guerra: 

Victoria needs to reclaim our competitive advantage from other states and tax increases do not align with that aspiration. People will be disincentivised to invest in things like factories and shop fronts while it will also have a negative impact on the residential property market as people will be reluctant to upsize considering the huge tax implications for doing so. It will drive up house prices in the $2 million plus category overnight.

“The Victorian Chamber recognises the pressure that COVID-19 support and recovery has placed on the state’s coffers, and it makes sense to repair that as soon as possible so future generations aren’t lumped with crippling debt.

“I hope that these tax hikesare balanced with broader business cost reductions in Thursday’s Budget, to help stimulate job creation, and I’d also like to see plans to reign in spending across the public service and curtail potential blowouts on major projects.

“The Government missed a real opportunity today to abolish stamp duty and replace it with a more efficient and fair property tax that would drive economic growth and make it easier for homebuyers and businesses. We will continue to advocate for this change.

“On a positive note, the government’s announcement today around revamping our social housing model will create jobs and provide a more sustainable system.”

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