Victorian budget adds a Covid tax for 860,000 as Daniel Andrews faces a debt crisis

Thousands of major corporations and landlords will pay most of Victoria’s COVID-19 debt bill under a $31.5 billion repayment plan from the state budget.

The 2023/24 Victorian Budget, handed over Tuesday by Treasurer Tim Pallas, describes a 10-year COVID debt waiver as part of a three-pronged strategy.

The $8.6 billion levy primarily targets the top five percent of companies with national payrolls in excess of $10 million, but includes exemptions for hospitals and charities.

Victoria’s tax-free threshold for general land tax is reduced and a fixed fee is added for those who own multiple properties under the second part of the levy.

Mr Pallas said around 860,000 Victorian landlords, holiday home owners and commercial property owners will be affected.

An average landlord with $650,000 in land holdings would pay $1,300 a year as part of the levy, which is expected to collectively bring in $8.6 billion over future estimates.

“It is reasonable that multi-property Victorians are making a modest contribution to repaying COVID debts,” Mr Pallas said.

Family homes will not be affected by the changes.

Other elements of the strategy include reducing the size of Victoria’s public service to pre-pandemic levels and expanding the previously announced $10 billion Future Fund, including legalizing it to ensure that it is only can be used for debt reduction.

About 3,000 to 4,000 public sector workers are expected to be affected by the cuts, but frontline workers will be spared.

The bill for public service personnel is expected to rise from $35.3 billion next fiscal year to $38.3 billion for fiscal year 2026/27 due to rising payroll costs.

Victoria spent $10.7 billion on health and $11 billion on business support during the pandemic, with Mr Pallas labeling debt reduction measures temporary and targeted.

“We’re making sure that while our kids will of course have memories of the trauma that the COVID years were, they don’t necessarily have to pay for that trauma for the rest of their lives and for generations to come,” he said.

The 2023/24 budget projects Victoria to run a surplus of $1 billion over two years — $100 million more than predicted before the November state election — and another $1.2 billion for 2026/27.

Net debt is expected to reach $135.4 billion by the end of the next fiscal year and reach $171.4 billion by mid-2027, representing 24.5 percent of gross state product.

Stamp duty will be abolished for commercial and industrial properties from mid-2024 and replaced by an annual property tax of one percent of the property’s unimproved land value.

Annual interest payments are expected to grow to nearly $8 billion over future estimates and tax revenues are expected to grow more than 20 percent to $40.4 billion.

Commercial and industrial properties will transfer to the new system upon sale and property taxes will be paid annually from 10 years after the transaction.

Lowering and ultimately eliminating the business insurance requirement, raising the payroll tax-free threshold from $700,000 to $900,000, and removing the payroll tax exemption for high-fee private schools are some other new measures.

As a result of the latter, some 110 schools will lose their tax-free exemption.

Also, the absentee owner surcharge rate will rise from two per cent to four per cent and Victoria’s wagering and wagering tax rate will rise from 10 per cent to 15 per cent from mid-2024, nearly doubling revenue for the racing industry of the United States. state means.