Victorian budget still 'heavily reliant' on property taxes - REIV

Date: 28 May 19

The Real Estate Institute of Victoria has warned the state government against putting too much faith in property taxes in the wake of the 2019/2020 budget.

A $5.2 billion write-down in stamp duty revenue throughout the past 12 months shows that Victorian Government "can't keep digging into the same pot to fund its promises", according to the Real Estate Institute of Victoria.

Treasurer Tim Pallas delivered the 2019/20 state budget on Monday night, which he described as "responsible and fair". 

The state's infrastructure industry was among the big winners of the night, with Mr Pallas announcing a 27.4 billion "suburban transport blitz" across the next four years.

 

2019/20 Victorian State Budget - key points

  • The Victorian Government has been forced to write down $5.2 billion in stamp duty revenue, due to the property downturn across the past 12 months.
  • Taxes for foreign property investors and absentee landowners will increase to match those in NSW.
  • There will be a $27.4 billion "suburban transport blitz" across the next four years.


He also declared there would be $2.6 billion invested to support jobs, economies and communities in regional Victoria. 

In his budget speech, Mr Pallas said the government would continue to invest in the state, despite "a range of challenges", including what he described as the largest downturn in dwelling prices on record.

While REIV President Robyn Waters welcomed infrastructure investment, she said the government could have done more to prepare for the correction of the housing market.

“Victoria’s property industry remains the cornerstone of the Victorian Budget, continuing to contribute 46 per cent of revenue and $10.5 billion in land tax and stamp duty alone in the next financial year,” she said.

“While we congratulate the Victorian Government on many positive initiatives, the reliance on property taxes is of great concern to our industry.

“The REIV and the industry predicted the property market correction and planned accordingly, but it seems the government did not.” 

The REIV made a submission to the government ahead of the budget, in which it identified a range of key priorities for the year ahead. They included:

  • Retaining and enhancing liveability 
  • Growing regional Victoria 
  • Keeping Victoria competitive – property taxes 
  • Reducing business costs – payroll tax 
  • Review the regulatory approach to real estate 
  • Removing legislative impediments to provide a secure investment environment 
  •  Smart industry: promoting education and employment opportunities 


Ms Waters said the budget had addressed many of the priorities outlined in the REIV submission.

"In particular, the REIV welcomes the payroll tax relief for small business and commends the Government for adjusting the rates in Regional Victoria so that by 2022/23 regional businesses will pay the lowest payroll tax in the nation,” she said. 

“The REIV is also pleased with the investment in new urban growth corridors and precinct plans which we have consistently advocated for.

"We welcome the Fishermen’s Bend Framework which includes homes for 80,000 people and the investment in the innovation and employment clusters in Sunshine, Monash, Dandenong, LaTrobe and Werribee.”

Click here for the state budget papers.

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