Protests erupted in Melbourne this week in response to looming tax hikes that would double — or in the case of farmers — triple property taxes.
The tax changes, passed by Parliament late last week under the Emergency Services and Volunteer Fund (ESVF), are set to take effect on July 1.
As crowds filled Melbourne’s central business district, voices from across the property and political sectors quickly weighed in. Many criticized the hikes as an unfair burden on property owners, warning that the added costs will only intensify financial strain amid an already challenging cost-of-living environment.
"I am infuriated by these new taxes," Adele Andrews, director and broker at Melbourne-based Australian Property Home Loans, told Australian Broker. "The Victorian property market has already taken a huge hit as a result of the recent taxes implemented by the new government. Land tax has all but crippled the investor market here. Not to mention the downstream implications on the rental market.
"And now we have this levy," Andrews said. "It will be a further detraction from people wanting to invest in Victoria; it will punish homeowners even further when they are already struggling with the cost of living and running a property. I actually don't know how much more the Victorian property market can take, before this government blows it up. Just as we get the easing of interest rates and a little positivity, the Victorian government announces this. It's a joke."
The ESVF raises the property tax rate on both residential and non-residential principal place of residence (PPR) from 8.7 cents to 17.3 cents for every $1,000 of property value. For a home valued at $1 million, that updated tax laws could tack on an additional $10,000 a year.
Commercial land owners and farmers will be hit even harder. For every $1,000 of property value, commercial land charges will increase from 66.4 cents to 133 cents, industrial land rates jump from 81.1 cents to 133 cents, and farmer's production land levies will go from 28.7 cents to 71.8 cents.
Bev McArthur, Liberal MP and member of the Parliament of Victoria, described the tax hikes to Sky News Australia as "disgraceful."
"[Money] shouldn't come from those who are in the most desperate situation," she said. "[The government] has just foisted a new property tax on Victorians. Every Victorian, every household in Victoria will have a 100% increase."
Belinda Raso, a registered tax agent at Queensland-based based accounting firm Tax Invest Accounting, added that the taxes won't just impact property owners and farmers, but renters as well.
"You have to factor in that if the costs are going on to investors, then that would mean rental prices will go up," she explained. "Because who's going to pay for this extra rate? So that's going to increase rental prices.
"When it comes to Victorian taxes as a whole, for investors, it's not a very attractive state at the moment," Raso said. "The government is doing more harm than good at the moment. It could force a lot of people out of Victoria and into other states."
Victoria’s already high tax regime and sluggish property returns have been driving investors away from the Melbourne market for several years. The introduction of the new tax laws may only accelerate this trend.
"Look at what happened during COVID," Raso said. "You had a lot of people leave to go to other states that weren't as restrictive. With the new tax laws, you're going to have people doing the same thing. And the property prices plunged back in COVID because there were higher occupancy rates. So it's not going to be good now; prices are going to go down because people are just going to want to leave the state."
Eamonn Keogh, co-founder and director of Melbourne-based Duo Finance, agreed that the tax increases are "not going to be seen as a positive."
"From a developers' and investors' perspective, you have to ask, will people want to look at Victoria? Are they going to look elsewhere?" said Keogh, whose finance brokerage specializes in business and commercial finance. "I would expect [the taxes] to be a deterrent. It's not going to promote Victoria. The cost of holding or maintaining a property in Victoria is going to become more expensive.
"I'm not sure we'll necessarily see a mass exodus, but I suspect that we're probably going to see a pretty stagnant market," he said. "Looking at the statistics, Victoria's [immigration] has actually performed okay recently. But I guess we've got to wait and see."
