The Victorian state government will target big business, housing investors and private schools as the main drive to collect tax revenues as outlined in its new budget report released on May 23.
But despite the targeted taxes, Treasurer Tim Pallas has denied the state budget is steeped in class warfare.
“Nobody’s engaging in a terminology of class warfare...that is not what’s motivating us,” he told reporters on May 23.
While Victorians must face a decade-long of tax pain via the new COVID-19 levies, which do target big employers and property owners, state debt is still set to skyrocket to $171 billion (US$112 billion) by 2026-27– almost $70,000 for every household.
Handing down his ninth budget emblazoned with Labor’s “Doing What Matters” election slogan, Tim Pallas defended his 10-year, two-part levy to help repay $31.5 billion in COVID-19 debt.
Under the new budget policy, from July this year, Victorian businesses with national payrolls above $10 million, which roughly represents five percent of the state’s employers, will pay an additional 0.5 percent in the payroll tax.
Businesses with a national payroll over $100 million must pay one percent in additional tax, which would raise $3.9 billion over the forward estimates.
In addition, another $4.7 billion will be collected from nearly 860,000 Victorian investment, holiday home or business property owners under land tax changes.
Budget forecasts indicate interest payments to service the staggering debt will hit $22 million a day by 2026-27 while tax revenue will jump to $40 billion – double what it was in 2015-16.
The other major target group is the 110 high-fee-paying private schools which will no longer enjoy the payroll tax exemptions and will thus generate $422 million over the next four years for the state.
Industry And Advocacy Groups United In Condemning The Measures
Industry and advocacy groups stand united in condemning the measures to stabilise the state’s worsening debt situation.Paul Guerra, Chief Executive of the Victorian Chamber of Commerce and Industry, told reporters that the Victorian state government is simply using the large business and property owners as an ATM to pay off its debt.
Australian Retailers Association chief executive Paul Zahra implies that the new and increased taxes would mean job losses and increased prices for customers, which would add more living pressures to ordinary Victorians.
Real Estate Institute of Victoria Chief executive Quentin Kilian said the new tax would only make the current rental crisis worsen: “This is a tax on families –not the big end of town.”
CPA Australia senior tax policy manager Elinor Kasapidis said, “Make no mistake, renters will end up footing the bill. This will exacerbate Victoria’s rental stress.”
Independent School Victorian chief executive Michelle Green said the removal of the tax-free exemption would create a damaging impact on usual operations for many schools and, as a result, cause disruption for students.
Victorian opposition leader John Pesutto believes that, although the state government needs to do something to reduce the debt, targeting employers, private schools, and property owners is not the right way. His recommendation is to cut the big spending on infrastructure.
Prime Minister Anthony Albanese said that he was confident Premier Daniel Andrews could rein in Victoria’s mounting debt without the help of his federal government.
