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Forcing homeowners to declare who lives in their residences could broaden the state’s residential vacancy tax to 10,000 properties and bring in an extra $300 million over the next four years, according to the Parliamentary Budget Office.
New analysis requested by the Victorian Greens and provided to The Age asked the independent PBO to model the impact of making the state’s tax on vacant residential properties enforceable – like how it works in Canada.
A vacant parcel of land in Sunshine.Credit: Chris Hopkins
It comes after Treasurer Tim Pallas announced the tax, which applies to homes empty for at least six months a year, would be expanded outside Melbourne’s inner and middle rings. Doing so would broaden its reach from about 900 homes to an additional 600 or 700 across the state.
But the PBO estimates this could be significantly boosted if the rules around the tax were changed.
The office was asked to model what would happen if the tax adopted the same rules as the Empty Homes Tax in Vancouver, Canada. That tax has similar rules to Victoria’s vacant residential land tax, but also requires homeowners to declare the occupancy status of their property every year – including who resides in it.
Canadians who lie about this information face heavy penalties and can be charged as much as $10,000 a day for providing false details.
The PBO estimates that adopting a similar policy in Victoria could force 10,000 properties to pay the tax, instead of about 1500, but it did acknowledge there was “significant uncertainty” surrounding this figure. Reform could also boost state revenue by $300 million between the 2023-24 and 2026-27 financial years and $1 billion over the next decade, according to the PBO.
The figure of 10,000 properties was based on publicly available data on activity at homes, including water and electricity usage.
Victorian Greens leader Samantha Ratnam said the figures showed thousands of homes could be freed up as potential rentals, part of the justification for the scheme.
“To ensure our support for any housing plan bills before parliament, the government will need to commit to reforms that will work – such as rent controls, and building more public housing – instead of privatisation and selling off public land,” Ratnam said.
The Greens have warned they will not support the government’s tax changes, or any other part of its landmark housing policy, unless Labor introduces tougher rent controls and changes its plan to rebuild Melbourne’s public housing towers.
“Labor’s housing plan will make the housing crisis worse,” Ratnam said.
“There’s nothing in it to prevent renters from continuing to face unlimited rent increases.”
The vacant residential land tax is 1 per cent of the improved value of the property, which includes the buildings and other additional features. The charge will apply across the entire state from January 1, 2025. Holiday homes and properties under renovation will remain exempt.
When announcing the tax’s expanded scope earlier this month, Pallas said it was designed to change behaviour and free up properties rather than improve the budget’s bottom line.
“What it does is, it tries to send a message to people who have underutilised assets to think about utilising them, making them available, for people to move into as homes,” Pallas said at the time.
“We would much prefer not to get $1 out of tax that seeks to change behaviour. We’d prefer behaviour to change so that we can get people into homes.”
Asked if she would rule out the government broadening the tax’s scope even further, Premier Jacinta Allan said on Tuesday: “I’ve got no additional advice on that.”
Shadow treasurer Brad Rowswell said Victorians should be concerned about the Greens dictating government policy.
“These measures will only further punish Victorians at a time they can least afford it, drive critical investment interstate and worsen Victoria’s housing affordability crisis.”
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