Victoria’s Skyrocketing Land Tax: A Small Business Owner’s Dilemma
Key Points:
- Victoria’s land tax has surged significantly, sparking concerns among property owners and small businesses.
Angie Romas, owner of a sandblasting and painting enterprise, DH Corrosion & DPC Coatings, faces an alarming increase in his land tax bill—rising from $8,700 ten years ago to a staggering $203,600 today. This 2,240% escalation translates to an annual hike of approximately $50,000, prompting Romas to speak out regarding the dire implications for his business, which serves major projects in the state.
“We’re being punished for just being here,” stated Romas in an interview with A Current Affair, emphasizing the untenable nature of the tax increase over the past decade. He pointed out that while he’s willing to pay a reasonable tax, the current rates far exceed acceptable levels.
As Romas notes, this unbearable tax burden prompts him to consider two drastic options: relocate to a more tax-friendly area or shut down operations entirely, which would lead to significant job losses for his employees. Furthermore, he expressed concerns that essential work provided to the state government could eventually shift to overseas markets, negatively impacting local jobs.
Government’s Stance:
Despite Romas’ plight, Victorian Treasurer Jaclyn Symes remains resolute in her position. She acknowledged the financial strain that land tax may place on some businesses but insists that the revenue is crucial for maintaining state services. According to Symes: “We set our tax settings with consideration of those that have the greater capacity to pay,” indicating a focus on revenue generation to support state infrastructure and services.
In the 2022-23 financial year, Victoria raised $5.2 billion from land tax, a figure projected to grow to $9.3 billion by 2027-28. As the state grapples with a burgeoning debt, anticipated to hit $187.8 billion by June 2028, the reliance on land tax as a revenue stream grows.
Chamber of Commerce Concerns:
The Victorian Chamber of Commerce and Industry has voiced strong concerns regarding the impact of land tax on small businesses like Romas’. They argue that excessive taxation hampers growth and discourages investment, especially for businesses that undertake government contracts. CEO Paul Guerra highlighted that the cumulative effect of various levies, including the mental health and Covid debt taxes, is driving costs to unsustainable levels.
Property investors are also feeling the pinch. Garry Salathiel shared his experience of a sharp increase in land tax from $397 to $3,096 within three years, revealing financial strain that forces him to contemplate passing costs onto tenants or even selling properties to fund his retirement. Salathiel lamented, “There’s nothing left” after accounting for various expenses, including property management and insurance.
Rising Instances of Tax Evasion:
In troubling statistics, one in three land tax bills is reportedly overdue by over 12 months, highlighting a growing reluctance or inability among Victorians to meet their tax obligations. Nationals’ Member for Mildura, Jade Benham, reflected on these figures as indicative of the financial pressures many residents are facing, suggesting that the government’s taxation policies are unrealistic.
Both business owners and tenants express frustration at the government’s current tax regime and the long-term implications it may have on the Australian economy. With many feeling the burden of escalated costs, there is a growing call for a re-evaluation of Victoria’s land tax policies to alleviate pressures on small businesses and regular property owners.
Conclusion
As Victoria confronts its growing debt and reliance on land tax revenue, the stories of individuals like Angie Romas and Garry Salathiel underscore the delicate balance between governmental revenue needs and the economic sustainability of local businesses. The ongoing debate signals the need for urgent attention towards creating a fair and manageable tax system that supports rather than stifles growth and investment in the state.
