Family businesses crying out for review of land tax rates

VICTORIANS are pleading for relief as figures reveal the land tax bill soared to $3.5 billion last financial year, crippling family businesses and self-funded retiree income.

The State Government’s windfall from the levy has rocketed to $950 million since 2017-18.

One self-funded retiree said they were scrambling to find an extra $30,000 to pay their tax bill.

Brighton Savoy managing director Michael Lee, 49, said his 50-year-old family business — a luxury venue and hotel on Brighton Beach — was at breaking point.

Mr Lee’s bill has reached $238,000, up from $181,000 three years ago.

“If it continues to increase at the rate it is going, we will have to sell,” he said.

State Revenue Office data shows the tax resulted in a revenue surge from $2.56 billion in 2017-18 to $3.51 billion last financial year.

Some property owners say their bill rose more than 10 per cent in a year, prompting warnings the tax was no longer feasible.

“Land tax is a cash cow for the State Government,” Mr Lee said. “If it continues to increase at the rate it is going, we will have to sell and it will be turned into apartments.”

Assessment notices are being sent out for 510,000 properties in Victoria.

Land tax is payable on any property valued at more than $250,000 that is not the owner’s principal residence.

Tax experts have blamed bracket creep, with the thresholds remaining unchanged for more than a decade.

The State Government has refused to reduce land tax rates.

But in 2017 Treasurer Tim Pallas adopted annual valuations, rather than biennially, to “reduce bill shock”.

Mr Pallas has defended land tax, saying it was essential to the running of the state.

“Land tax revenue helps make sure the services and infrastructure that Victorian families count on are delivered,” he said.

With the Budget surplus being slashed by almost 40 per cent to $618 million in the latest update, it is unlikely the Government will reduce rates.

Shadow Treasurer Louise Staley called for thresholds to be reviewed and warned the ballooning cost was far outweighing income.

“Thousands of Victorians face land tax bills higher than the rent received on their properties,” Ms Staley said.

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