Victorian Budget 2018-19 An Opportunity Lost
The Real Estate Institute of Victoria is disappointed that the Andrews Labor Government has not provided any property tax relief in its Budget handed down this week.
“While the Premier says his government is getting things done, it has failed to get one of the most important things done,” REIV President Richard Simpson said.
“We believe that a reduction in taxes on land, and on real estate transactions, would incentivise investment and it is hard to understand why the Government has missed this opportunity to address the Land Tax issue.
“Property taxes will account for over $11 billion of the state’s $24 billion tax revenue in 2018-19. It is a heavy burden indeed and one that needs to be reduced.”
“When the Government refuses to cut taxes at a time of Budget surplus, strong economic growth, Triple-A credit ratings and a rapidly growing population, Victorians must be sceptical that it will ever do so.”
Treasury predicts the haul from Land Tax will increase again next year, and again in each of the three years following, which is bad news for property investment in this state.
Despite a healthy take-up of the lower Land Transfer Duty incentive offered to first-time home buyers, the Government’s total take from this tax has increased this year and is projected to rise again in 2018-19, and every year over the forward estimates.
Given that there is no provision in this Budget for increased public housing, that the rental market across Victoria is tight, and that home prices are continuing to rise, further cuts to Land Transfer Duty would have encouraged investors and provided increased opportunity for homebuyers without hurting the Budget bottom line.
“In this election year, the REIV will continue to urge both sides of politics to commit to a reduction in the tax burden on property,” Mr Simpson said.
The REIV supports the cuts to payroll tax in regional Victoria while noting that many businesses are too small to take advantage.
“Payroll taxes, like property taxes, curb investment and are anti-employment. We welcome any cuts but would have preferred a further increase in the payroll tax threshold so that all businesses can benefit.
“REIV also welcomes the continued commitment to improving road and rail infrastructure. Access to efficient public transport, better roads and faster rail, as well as proximity to essential services make locations more desirable and increase demand,” Mr Simpson said.