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A re-elected Labor government will progressively restore Victoria's land tax-free threshold to $300,000 by 2033, removing 250,000 people from the system and saving up to $975 a year.
About 250,000 Victorians will be progressively removed from the land tax system if the Labor government is re-elected in November, reversing a major Andrews-era policy introduced to pay down the state's COVID debt. Premier Ben Carroll will announce on Sunday that the tax-free threshold will progressively return to $300,000 over six years, saving eligible property owners up to $975 a year depending on property value.
Government Details Land Tax Relief Plan
The change, outlined in a government statement, would ultimately drop 250,000 people from the land tax list. The vast majority of those affected paid land tax on only one property. The government said the reversal would be implemented progressively so families start saving from day one.
Under the plan, the tax-free threshold will increase by 25,000 dollars in each of the next four financial years, before settling back at 300,000 dollars in 2033. From the next financial year, people with land worth between 50,000 dollars and 75,000 dollars, estimated at 33,000 people, would be spared paying 500 dollars a year in taxes they have faced since January 1, 2024.
Carroll said lower land tax means more cost-of-living relief for working people. He added that the overhaul would cost the budget 230 million dollars, which the government could afford thanks to commonsense decisions to reduce spending. Those decisions include delaying level crossing removals, cutting public service executives and consolidating the government's car fleet.
Background on Andrews-Era Tax Changes
As Victoria emerged from COVID lockdowns under then-premier Daniel Andrews, the government dropped the land tax-free threshold to 50,000 dollars in the 2023 budget. It also introduced an additional 500 dollar charge for landholdings worth between 50,000 dollars and 100,000 dollars, and 975 dollars for landholdings worth more than 100,000 dollars.
Those additional charges and the reduced threshold were due to raise 4.7 billion dollars over four years and remain in place until 2033. The changes added thousands of Victorians to the land tax list for the first time and increased the cost of owning a second home or investment property by at least 500 dollars.
At the time, Victoria's net debt stood at 116 billion dollars. Today it is 167 billion dollars, a figure forecast to rise to almost 200 billion dollars by the end of the decade. Under the original schedule, the tax-free threshold was supposed to return to 300,000 dollars by 2033. The additional fixed charges introduced under Andrews will remain in place under Carroll's plan.
Housing Sector Warns of Tax Burden
When the government ramped up land tax collection, economists and housing industry groups warned the changes could contribute to higher housing costs. Last month, the nation's top housing bodies, which had agreed to work with the government on its plan to build 800,000 homes in a decade, said this goal could not be achieved because excessive red tape and taxes had hogtied the sector.
The Property Council's Victorian executive director Cath Evans said the sector urgently needed a road map out of the crushing taxes imposed on developers. The industry singled out the windfall-gains tax, a charge on property value increases caused by government rezoning introduced in mid-2023, and the land tax increases levied to restore the state's finances after the pandemic. Evans said there is a range of taxes where Victoria is completely out of whack with interstate counterparts.
Other Parties Outline Tax Policies
One Nation has also pledged to wind back land tax hikes, though the party has not said by how much or how soon. It has also pledged to abolish stamp duty and review all taxes, including those that increase the cost of home ownership.
The Victorian Greens' policy platform includes increasing taxes on vacant properties to encourage more rentals, and replacing stamp duty with land tax to improve housing availability and diversity.
Carroll said the government would implement the reversal progressively so families start saving on day one, framing the move as cost-of-living relief for working people. The government said the change would ultimately remove 250,000 people from the land tax system, providing savings of up to 975 dollars a year depending on property value.
Victoria Land Tax Ben Carroll Labor Government Property Council Daniel Andrews Stamp Duty Housing Affordability
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