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Outrage over new land tax grab

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Outrage has followed the Victorian government’s decision to slug some property owners with a shock new tax, while others are calling the move “smart”.

Victorians have slammed the new state government’s decision to expand a land tax in its first move since former Premier Daniel Andrews stepped down as leader.

Treasurer Tim Pallas announced the surprise move at an industry breakfast on Tuesday, just one day after the state’s new leader Jacinta Allan unveiled her first cabinet.

Victoria’s Vacant Residential Land Tax, a charge on homes that have been left unoccupied for more than six months, will be expanded to the entire state, including regional areas, from January 1, 2025.

Treasurer Tim Pallas
Victorian Treasurer Tim Pallas announced the new housing tax plan on Tuesday Picture: NCA NewsWire / Andrew Henshaw
Premier Jacinta Allan
New Victorian Premier Jacinta Allan has been accused of not knowing about the policy before it was released by the Treasurer. Picture: NCA NewsWire / David Crosling

Currently, only properties in Melbourne’s inner and middle-ring suburbs are affected by the tax, which is charged at one per cent of the total value of the property.

The move was described as a “shock” by Victorian Property Council executive director Cath Evans, who said that the government made no mention of the plan when the two groups met last month to sign an affordability partnership.

“It’s clear that without consultation ... there has not been good faith in the execution of the agreement to date,” she said.

The treasurer has defended the move, saying it would encourage more development as Australia battles the housing crisis.

“We can’t afford really to have vacant land in metropolitan Melbourne sitting idle for year on year,” Mr Pallas said.

“Our clear message to landowners is to either develop the land or sell it to someone who will.”

The controversial proposal is the first new policy from the Victorian Labor government after Dan Andrews stepped down as premier. Picture: NCA NewsWire / David Crosling

There’s been mixed reactions from rental advocates on the new policy.

It was described as a “smart policy” by Victorian Council of Social Service interim chief executive Juanita Pope, who urged the government to put the tax toward social housing.

“Empty residential land that’s banked by investors and land barons benefits nobody,” Ms Pope said.

“Creating a financial incentive for land investors to build homes or relinquish the empty land is smart policy.

“Extending this policy beyond Melbourne is a commonsense acknowledgment that the housing and rental crisis also affects regional Victoria.”

Rental advocate Jordie Van den Berg said that the tax contained a “problem” in that landlords are required to “self-report their land banking”.

“Landlords will never do this, so unless the expansion of this tax replaces self-reporting with actual enforcement, it will again, do nothing,” he said.

Opposition criticism of an expanded vacant land tax continued on Wednesday, with Liberal Member for Brighton quoting a constituent who labelled the tax “disgusting”.

“We have seen this week, a raft of new taxes that the government wasn’t even aware of, that the premier wasn‘t even aware of,” he said.

“...haven’t we seen the lack of consultation with industry groups in the last 24 hours? We’ve seen the property industry talking about the burning, the torching of the government’s relationship with the sector.”