The Andrews government in Victoria is set to impose its 50th new or increased tax on the state’s residents, despite Premier Daniel Andrews promising no new taxes when he was elected in 2014. The opposition has released an analysis showing that since coming to power, the government has introduced 49 new or increased charges. The latest proposal is a tourism tax, including a possible levy on Airbnb rentals, which would help pay for a housing affordability package. This comes as Victoria is already the highest-taxed state in the country.
In response to the government’s taxation measures, the opposition has released a discussion paper aimed at reforming Victoria’s tax system. The paper calls for public input on how to make the tax system more competitive and reduce the cost of living. The state’s independent budget watchdog has also warned that workers’ compensation premiums are set to increase by 41 percent, and Victoria is expected to have the second highest total payroll tax revenue in 2022-23. Business groups have expressed concerns about the impact of additional taxes on businesses and their competitiveness.
The opposition leader has stated that the discussion paper will help shape the party’s policies for the 2026 election and highlight the need to fix Victoria’s broken tax system. However, a government spokesperson has defended the taxation measures, stating that the government has cut or abolished taxes and charges 63 times since taking office and that Victoria’s economy is strong.
In addition to the tax proposals, the government is considering a two-year rent freeze as part of its housing and rental affordability measures. The proposal would prevent landlords from raising rents more than once every two years. However, industry experts have warned that this could lead to a mass exodus of landlords and the sale of more than 212,000 investment properties. Landlords are already considering exiting the market due to rising land tax costs, interest rate hikes, and changes to the Residential Tenancies Act in Victoria. The property industry has called for a focus on increasing housing supply as a long-term solution to the rental affordability crisis.
The government’s proposals have sparked a debate about the impact of rent controls on the rental market. Critics argue that rent controls can lead to a reduction in rental supply, as landlords choose to sell their properties instead. International examples, such as Paris and Berlin, have shown mixed results with rent controls, with some programs being abandoned due to negative effects on the rental market. However, tenant advocacy groups argue that more regulation is needed to ensure fairness for renters, as some landlords are reportedly profiting from the rental crisis.
Real Estate Institute of Victoria chief executive Quentin Kilian said he supported less council involvement in planning decisions which could help streamline new housing construction, but warned against locking landlords into rents for two-year timelines. “Landlords will look at this and say if I can’t do anything with pricing for the next two years, but you are going to increase your tax in that time, then I just won’t play any more,” Mr Kilian said. “This will make the decision a lot easier for those who are sitting on the fence.”
