THE Victorian government is becoming addicted to property taxes, which will raise over $6 billion in forward estimates for the 2013-14 Victorian State Budget.
Treasurer Michael O’Brien’s first budget dubbed “Building for Growth” also revealed a record investment in infrastructure, of $6.1 billion in 2013/14, rising to $6.6 billion in the following year.
The major projects include $224 million stage 1 East West Link tunnel; $203 million to build five new schools; and new hospitals for Bendigo, Monash and the redevelopment of the Victorian Eye and Ear Hospital.
However taxes on property is expected to increase by over $2 billion over the next four years.
The Property Council said it is concerned at the property industry shouldering the budget.
“Over the next four years, tax revenue sourced from property will increase by over $2 billion. Increases in Stamp Duty, Land Tax, Fire Services Property Levy and the Car Parking Levy reflect a growing addiction to property taxation,” Property Council executive director Jennifer Cunich said.
“Property owners will be worried at the government’s growing dependence upon property taxes. Future budget surpluses and Victoria’s investment pipeline must be built upon savings, efficiencies and private investment as much as rising tax revenue. No Victorian government can tax their way out of its service and infrastructure obligations,” she added.
The Australian Property Institute estimates taxes on property are forecast to contribute $6.075 billion to state revenue in the financial year ahead, up 17.8% from 2012-13 levels due to an anticipated recovery in land transfer duty and land tax revenues, the commencement of the new fire services property levy and a sharp increase in the congestion levy.
The API said the congestion levy is an annual charge on owners of long stay off-street car parking spaces in Melbourne’s CBD and adjacent areas. On 1 January 2014, the congestion levy will increase to $1 300 a space, and will apply to both long and short stay parking.
The fire services property levy replaces a levy on insurance premiums.
The API said gross state product is forecast to grow from 1.5% this financial year to 2.25% next and to continue to rise to 2.75% over the medium term. Net debt is forecast at 6.4% of gross state product in 2013-14, falling to 5.4% by the end of the forward estimates.
The API said state revenue is forecast to rise from $48.1 billion to $50.3 billion.
Master Builders Association of Victoria executive director Brian Welch said infrastructure spending such as the East West Tunnel will drive economic opportunities for decades to come.
“This project will ensure the Victorian construction industry retains much sought after skills that may have been lost forever to other states, particularly around tunnelling.” Welch said.
The government also announced $2.1 million for E-Gate planning for the development of the 23 ha E-Gate site at the West Melbourne rail yards, just 2 km from Melbourne’s CBD.
And $3.1 million for phase two environmental site assessments on Crown land to unlock prime publicly owned development sites.
The government will also merge and create a new super Department of Transport, Planning and Local Infrastructure, so the different portfolios can work better with each other.
Meanwhile the government reaffirmed the First Home Owner Grant for newly constructed homes will increase to $10,000 from 1 July 2013.
Property Review
