Tax increase on vacant property passes parliament
6 December 2023
A bill to increase the land tax on vacant homes has passed parliament after amendments were debated last sitting week.
The State Taxation Acts and Other Acts Amendment Bill 2023 will now go to the Governor for royal assent.
Under the amended act the period that properties can be deemed vacant will commence on 1 January 2024, with the tax changes beginning in 2025.
In moving the amendments Danny Pearson, Assistant Treasurer and Member for Essendon said the new arrangements ‘will make more properties available for people to live in’.
‘The bill expands the vacant residential land tax to also apply to unimproved residential land that has been undeveloped for more than five years in established areas of Melbourne to discourage land banking and encourage new housing developments,’ he said.
It allows for some exemptions, including for holiday homes.
“ The bill expands the vacant residential land tax to also apply to unimproved residential land that has been undeveloped for more than five years in established areas of Melbourne to discourage land banking and encourage new housing developments. ”
Danny Pearson, Assistant Treasurer
Shadow Treasurer and Member for Sandringham Brad Rowswell in his speech described the taxes as ones ‘the Victorian people simply cannot deal with at this time’.
'Someone has got to pay for those new taxes. It probably will not be the minister at the table, but it might be someone else who can least afford it,’ he said.
“ The Victorian people simply cannot deal with [new taxes] at this time. ”
Brad Rowswell, Member for Sandringham
Sam Hibbins Member for Prahran said ‘the idea or the fact that there are thousands of homes sitting empty in our community is just abhorrent’.
‘The purpose of this tax is not to collect revenue but actually to push empty homes onto the market for renters and for people who are in need of their first home,’ he said.
The bill was also debated in the Legislative Council.
“ The purpose of this tax is not to collect revenue but actually to push empty homes onto the market for renters and for people who are in need of their first home. ”
Sam Hinbbins, Member for Prahran
Melina Bath, Member for Eastern Victoria said the taxes would hit ‘middle Victoria’.
'The government’s commentary around this tax is that it will increase housing supply, so let us tax vacant land, let us tax vacant property and let us tax Victorians as a way of increasing housing supply. The government has failed to show Victorians what basis for that modelling exists, because it does not exist. It is an apparition,’ she said.
Member for Northern Metropolitan Samantha Ratnam said the amendments were necessary to fix the current system for taxing vacant land.
‘One of the most ridiculous things about the current tax is that it is essentially voluntary. Analysis from the Parliamentary Budget Office suggests around 18 per cent of those liable for the tax pay it – that is, four in five landowners liable for the tax just simply do not pay it or have an incentive to change their behaviour,’ she said.
‘The key amendments that are being brought before the house now are to increase that rate to 2 per cent if your home is vacant in the second year and then 3 per cent if it is vacant in that third year or subsequent years. My understanding is that this will actually cover a significant number of empty homes and will go a long way to pushing those homes onto the market,' she said.