The Victorian government has announced that it is set to impose a 3.0 per cent levy that will apply to foreign citizens who are not permanent residents, and a 0.5 per cent land tax surcharge to absentee property owners who are not citizens or permanent residents.
It is unfortunate that the Victorian government has chosen to not consult with the property industry’s biggest employers on such a major announcement. The property industry is currently sustaining the Victorian economy with stamp duty generating the highest tax revenue in the state. Overseas investors are an easy revenue raising-target for the government.
Foreign property investors are the lifeblood for several major property projects across Victoria. Without this cash injection many would not be developed and thousands of jobs would be lost. The state government is sending the message to foreign investors that it is not open for business by introducing new property taxes.
Overseas buyers are about to be slugged with two new property taxes from both federal and state governments – a double whammy. The federal government is currently considering introducing a $5,000 levy as part of its Foreign Investment Review Board changes for overseas buyers purchasing in Australia. This fee will be added to the proposed Victorian state government levy and land tax.
Australia has gained an enviable reputation as a place that welcomes foreign investment. Much of our economy has been built on the back of foreign investment and wealthy business immigrants moving to this country.
To secure Australia’s long-term economic prosperity, we need to welcome and support foreign investment and reinforce this position to ensure we do not lose the competitive economic gains as a nation from it.
The Victorian government’s announcement to slug foreign property purchasers with a new tax is short-sighted. It is hoped the other states don’t follow their lead. We expect foreign purchasers to start looking for more investment opportunities in other states.
Both the federal and state governments are about to cut off the hand that feeds it by introducing new taxes for foreign property buyers. Careful consideration is needed by all levels of government to ensure Australia remains a viable place to invest.