Tax on big business, landlords to pay off Victoria's COVID-19 debt
Victoria's 2023-24 budget is focused on the government "taking responsibility" for the state's mounting debt burden after $31.5 billion was borrowed for COVID-19 recovery.
Treasurer Tim Pallas has called the budget undoubtedly "the most difficult" he has handed down in his nine years, with the government striving to get Victoria's finances "back on track by 2033".
The state's net debt is forecast to hit $162.2 billion in 2025-26, and $171.4 billion by 2026-27.
READ MORE: Budget winners and losers
It's a far cry from last year's big-spending state budget, with this year all about cost-cutting and paying off the state's bill.
The budget headline is a 10-year COVID Debt Recovery Plan that will target the state's big businesses.
It will squeeze an additional $8.6 billion out of businesses over the next four years, according to the treasurer.
"The COVID debt has served its purpose, it's not a dead weight on our economic activity," Pallas said.
READ MORE: How Victoria's new COVID Debt Levy will work
Businesses with payrolls above $10 million a year, which is about five per cent of Victorian businesses, will have to pay additional payroll tax.
Those businesses will have to pay 0.5 per cent from July 1, 2023, while businesses with payrolls above $100 million will pay an extra 0.5 per cent.
The second part of the levy will involve lowering the land tax threshold from $300,000 to $50,000 and adding a "modest" fixed charge, with larger landholdings paying an extra 0.1 per cent of land value.
This will exclude homeowners, but will mean that people who own an investment property – an estimated 860,000 people – will now be hit with the tax.
About 380,000 of those people will not have paid land tax previously.
Pallas reassured the levy is "temporary and targeted", saying it is to the benefit of young Victorians "who've made enough sacrifices".
"These are difficult times but we are not going to exculpate ourselves from our obligations to the community," Pallas said.
"We borrowed $31 billion to pay for the tool to confront the emergency.
"To those who criticise our debt, I would say it is easy to forget. It's easy to forget the arrival of the pandemic and the grim possibilities ahead if we failed to act effectively.
"This is the start of a new era. The post-COVID era."
Pallas further said the budget would deliver on "every commitment" made at the last election, including free kindergarten, a $776 million investment in mental health services and improving mental health in the workplace and bringing back the SEC.
Investment in projects like the Airport Rail Link and the Geelong Fast Rail – which are being reconsidered by the federal government – have been wiped from the Victorian budget, with no confirmed adjusted figures.
There will be a $391 million increase in major projects with a 15 per cent timeline variance.
The increase is due to "market capacity and material supply," budget papers confirm.
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