A plan to pay down $31.5 billion worth of Covid related borrowing was the headline from Tuesday's budget, the ninth delivered by Treasurer Tim Pallas.
Several taxes will be introduced, including a temporary extension to land tax for investment properties and second homes.
From 1 January 2024, the tax free threshold property value will be reduced from $300,000 to $50,000, and the rate will increase by 0.1% of the value over $300,000.
There will also be an additional temporary fixed charge for the tax eligible of $500 for land worth $100,000 or below, while more expensive landholding will incur a $975 fixed fee.
The Victorian Government estimated that these changes could bring in $4.7 billion over four years.
An additional payroll tax and cuts to public spending were the other temporary measures introduced to help Victoria lower its deficit.
How the changes could look
| Land value | Current tax liability | New tax liability | Fixed cost | Extra tax |
| $400,000 | $575 ($375 plus 0.2% of amount > $300,000) | $675 ($575 plus 0.1% of amount > $300,000) | $975 | $1,075 |
| $500,000 | $775 ($375 plus 0.2% of amount > $300,000) | $875 ($775 plus 0.1% of amount > $300,000) | $975 | $1,175 |
| $600,000 | $975 ($975 plus 0.5% of amount > $600,000) | $1,275 ($975 plus 0.1% of amount > $300,000) | $975 | $1,275 |
| $700,000 | $1,475 ($975 plus 0.5% of amount > $600,000) | $1,875 ($1,475 plus 0.1% of amount > $300,000) | $975 | $1,375 |
| $800,000 | $1,975 ($975 plus 0.5% of amount > $600,000) | $2,475 ($1,975 plus 0.1% of amount > $300,000) | $975 | $1,475 |
| $900,000 | $2,475 ($975 plus 0.5% of amount > $600,000) | $3,075 ($2,475 plus 0.1% of amount > $300,000) | $975 | $1,575 |
| $1,000,000 | $2,975 ($2975 plus 0.8% of amount > $1,000,000) | $3,675 ($2,975 plus 0.1% of amount > $300,000) | $975 | $1,675 |
Proving unpopular with property pundits
Unsurprisingly, the budget has been controversial amongst property advocacy groups.
Ben Kingsley, Chairman of the Property Investors Council of Australia (PICA) said the Victorian Government are asking aspirational and hardworking property owners to pay the price for its incompetence.
"This is what happens when you have so much debt as well as continued economic mismanagement and self-serving governance,” Mr Kingsley said.
"It's a classic case of which policy is going to cause the least amount of political damage, so, they go after the aspiring and hardworking Australian, but aspiration in Victoria is officially dead under the Labor Government.”
Further concerns were raised about what this could mean for tenants in Victoria, where like the rest of the country, rental rates are soaring.
Just 16.55% of the rental properties in Melbourne are available for $400 or less, compared to 38.64% in April 2022.
Many within the property industry believe the primary driver of the rental crisis is a supply squeeze, as high interest rates and other costs are pushing investors out of the market, and decreasing the rental supply.
This was one of the chief criticisms that met Queensland's move earlier this year to introduce caps to rental increases.
Nicola McDougall, Chairman of the Property Investment Professionals of Australia (PIPA) believes the extra tax liabilities on Victorian property investors will act in a similar way.
"This absurd policy will no doubt lead to the exodus of investors in Victoria who are already struggling with significantly higher mortgage repayments that dwarf any increases in rent over the past year," Ms McDougall said.
Victoria Premier Dan Andrews agreed that low supply was causing high rental rates, but rejected the idea that this tax would decrease supply further, and said that the government would be addressing the lack of homes in Victoria in the coming months.
"We need to do better. We need to do more in terms of getting more supply into the market," he told reporters on Wednesday at Monash University.
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