According to a report from the Parliamentary Budget Office (PBO), Victoria is expected to generate the highest combined property tax revenue per person of all states from 2022-23 through to 2026-27, highlighting the pivotal role property has become to the state’s bottom line.
The independent watchdog’s report shows Victoria is forecast to record the highest property tax-to-GSP ratio of any mainland state over the next several years.
New South Wales ranks second, but its ratio is expected to average 0.6 percentage points lower than Victoria’s between 2023-24 and 2025-26.
Victoria is expected to raise $2,120 per person in combined property taxes in 2023-24, rising to $2,400 per person by 2026-27, the highest of any state across the forward estimates.
By comparison, NSW is forecast to collect $1,646 per person in 2023-24 and $1,901 in 2025-26, significantly lower than Victoria’s projected figures.
Land tax alone tells a similar story, with Victoria forecast to generate the most land tax per person of any state from 2022-23 to 2025-26.
The state also recorded the highest land tax-to-GSP ratio in all forecast years, partly reflecting the introduction of the COVID Debt Levy on landholdings.
Property taxes are forecast to account for 16.3 per cent of Victoria’s total state revenue in 2023-24, rising to 17.4 per cent by 2026-27, the highest share of any state.
The PBO notes this reliance “partly reflects lower revenue from other sources, such as commonwealth grant revenue and royalties.”
When looking specifically at state tax revenue, land transfer duty and land tax combined are forecast to make up 41.8 per cent of Victoria’s state tax revenue in 2023-24, climbing to 43.1 per cent by 2026-27.
In 2023-24, land transfer duty alone is expected to account for 21.1 per cent of state tax revenue, rising to 23.2 per cent by 2026-27, while land tax is forecast to contribute 20.7 per cent in 2023-24.
The Victorian Budget 2023-24 introduced the COVID Debt Levy on landholdings, which the PBO included in its land tax calculations.
The levy is forecast to generate $1.149 billion in 2023-24 alone, contributing to a total land tax take of $7.228 billion that year.
Across the forward estimates, changes to land tax associated with the COVID Debt Repayment Plan are expected to raise $4.741 billion.
From 2023-24 to 2025-26, Victoria is forecast to generate the most land tax revenue of any state, partly reflecting the introduction of the levy.
While NSW is expected to collect more property tax revenue in absolute terms in some years, the PBO makes clear that Victoria stands out when revenue is measured relative to population, state revenue and gross state product.
Opposition Leader and treasury spokeswoman Jess Wilson said the heavy tax burden was driving people away from the state.
“Under Labor, dreams of homeownership for young Victorians continue to slip further out of reach,” she told the Herald Sun.
“Since 2014, land tax has more than tripled and stamp duty has more than doubled.
“Every extra dollar raised is pushing up rents, home prices and the cost of investing in new housing stock.”
