Wednesday May 24, 2023
The Victorian State Government will target big business, housing investors and private schools as the main drivers of tax revenue, it said in its new budget report released on May 23.
But despite the targeted taxes, Treasurer Tim Pallas denied the state budget was mired in class warfare.
"No one engages in the terminology of class struggle...that's not what motivates us," he told reporters on the 23rd.
As Victorians face decades of tax pain from new COVID-19 levies targeting large employers and property owners, the state's debt is still set to skyrocket to A$171 billion ($112 billion) by 2026-27 - almost 70 000 USD. for every household.
Tim Pallas released his ninth budget emblazoned with Labour's "Doing What Matters" campaign slogan and championed his 10-year, two-part levy to help pay down the $31.5 billion COVID-19 debt.
From July this year, Victorian businesses with national payrolls above $10 million, which is roughly five per cent of the state's employers, will pay an extra 0.5 per cent in payroll tax under the new budget policy.
Businesses with a national payroll of more than $100 million must pay one percent in additional taxes, which would raise $3.9 billion from preliminary estimates.
In addition, an additional $4.7 billion will be collected from almost 860,000 Victorian owners of investment, holiday homes or business properties as part of land tax changes.
Budget forecasts suggest interest payments to service the staggering debt will reach $22 million a day in 2026-27, while tax revenue will jump to $40 billion - double what it was in 2015-16.
The second major target is 110 high-fee private schools that will no longer enjoy payroll tax exemptions, generating $422 million for the state over the next four years.
Meanwhile, about 4,000 public sector workers will lose their jobs to save the state government another $2.1 billion.
Industry and advocacy groups united in condemning the measure
Industry and advocacy groups unanimously condemn measures to stabilize the state's worsening debt situation.
Paul Guerra, CEO of the Victorian Chamber of Commerce and Industry, told reporters the Victorian state government was simply using big businesses and property owners as an ATM to pay off its debts.
Australian Retailers Association chief executive Paul Zahra suggests the new and increased taxes would mean job losses and higher prices for customers, adding to life pressures on ordinary Victorians.
Real Estate Institute of Victoria chief executive Quentin Kilian said the new tax would only worsen the current rental crisis: "It's a tax on families - not the big end of town."
The decision to lower the land tax exemption threshold to $50,000 will now affect "almost everyone" and the extra fixed charge was a "tax on tax", the Herald Sun reported.
CPA Australia senior tax policy manager Elinor Kasapidis said: “Make no mistake, tenants will end up footing the bill. This will make Victoria's rental stress worse.
Independent School Victorian boss Michelle Green said removing the tax exemption would have a detrimental impact on the normal running of many schools and cause disruption to students as a result.
Victorian Opposition Leader John Pesutto believes that while the State Government needs to do something to reduce debt, targeting employers, private schools and property owners is not the way to go. His recommendation is to cut big spending on infrastructure.
"It's not property investors driving Ferraris," he told ABC Radio Melbourne on Wednesday.
Premier Anthony Albanese said he was confident Premier Daniel Andrews could rein in Victoria's rising debt without help from his federal government.
“They have made a huge amount of investment in infrastructure. The Victorian economy is growing again,” he told Seven’s Sunrise.
