Victoria’s state government has made a range of changes to its Windfall Gains Tax prior to it being introduced to Parliament, but industry groups say the move is the “wrong tax at the wrong time” that will have a big negative impact on housing affordability.
The tax, initially announced as part of…
Victoria’s state government has made a range of changes to its Windfall Gains Tax prior to it being introduced to Parliament, but industry groups say the move is the “wrong tax at the wrong time” that will have a big negative impact on housing affordability.
The tax, initially announced as part of the Victorian government’s 2021-22 budget, will see value increases from rezoning decisions be taxed at 50 per cent if the uplift is above $500,000, phased in from $100,000.
Changes to the previously announced tax include residential land that includes a home being exempt from the tax, while farmland that contains a home will also be exempt up to two hectares.
Exemptions will also be provided for charities if the land is used for charitable purposes for at least 15 years after rezoning, while the commencement of the tax has been pushed back by a year, to July 2023.
The Windfall Gains Tax will be calculated based on valuations by the Valuer-General on the pre-zoning and post-zoning values of land.
Treasurer Tim Pallas said revenue from the tax would help fund Victorian schools, hospitals and public transport.
“We’ve consulted with industry and made the changes that are appropriate and fair, and will ensure the community benefits, as well as landowners,” Mr Pallas said in a statement.
While welcoming the changes, a coalition of industry groups comprising the Property Council of Australia, Urban Development Institute of Australia, Housing Industry Association and Master Builders Victoria are united in a campaign to stop the bill from proceeding through Parliament.
The industry groups say the tax is the 19th new or increased property tax to be introduced by Premier Daniel Andrews’ government since it was elected in 2014 and follows increases in stamp duty and land tax announced in the May state budget.
Victorian executive director of the Property Council, Danni Hunter, said her position had not changed from when the tax was first floated, saying it was the “wrong tax at the wrong time”.
“Five months on and after another three devastating lockdowns, our economic and social crisis has only worsened, and the last thing we need as we emerge from the world’s longest lockdown is another tax,” Ms Hunter said.
“We are calling on MPs from all sides to do the right thing by Victorian families, jobs and investors and oppose this tax so we can get on with our important economic recovery and get Victoria moving again.”
Housing Industry Association Victoria executive director Fiona Nield said the new impost would affect housing affordability, with the price of a vacant lot in Geelong to increase by $53,000.
“The tax will take a disproportionate share of property value from landowners that are in fact helping to support the growth in housing supply that keeps affordability in check across regional Victoria,” Ms Nield said.
“New taxes like this will impact land prices and home buyers at all levels at a time when housing affordability has fallen, particularly in the regions.”
Modelling by the UDIA showed the tax would reduce housing supply by more than 6,600 dwellings, including more than 300 affordable, social or disabled access homes.
UDIA Victoria chief executive Matthew Kandelaars said it would cost more than 20,000 direct jobs, 100,000 indirect jobs and reduce economic output by nearly $7.5 billion.
“It’s the value generated from a rezoning that builds more Victorian homes, creates and sustains thousands of local jobs and builds new communities,” Mr Kandelaars said.
“The urban development industry makes a significant contribution to Victoria, including creating affordable and social housing for families in need.
“If development stops then housing supply dries up and prices skyrocket, and this will have a detrimental impact on Melbourne’s liveability.”
