Australia

Property taxes to be hiked in Vic budget

Victorian Treasurer Tim Pallas will introduce new taxes to offset a fall in stamp duty revenue. (AAP)

Victorian Treasurer Tim Pallas is set to announce a suite of property tax changes to offset a shortfall in stamp duty revenue in this year's state budget.

Victorian property owners will face millions of dollars in increased property taxes in this year's state budget.

Treasurer Tim Pallas unveiled property taxes for heritage property and residential land owners on Saturday alongside increased duties for luxury buyers and a new tax on gold miners.

The biggest hit will be on foreign buyers with an increase duties and a rise in the absentee owner land tax surcharge.

Measures are designed to offset a $5.2 billion shortfall in stamp duty forecast over the next four years because of a softening market, he said on Saturday.

"We of course are dealing with a difficult situation with regard to the property market but it is one we are managing," he said, acknowledging the "big number" weighed against a forecast $240 billion revenue over four years.

The foreign investor duty will rise from 7 to 8 per cent from July 1 this year, while around 3000 foreign owners will be hit with a rise in the absentee owner tax from 1.5 to 2 per cent from January 1.

The Property Council of Australia says the move will hurt local businesses, threaten jobs and cripple investment opportunities.

"Global investors will close the door on investment in Victoria because of this decision," executive director Cressida Wall said, describing it as a "short-sighted cash grab".

But Mr Pallas said the increase, expected to raise $330 million over four years, will bring Victoria in line with NSW.

"Victoria is (home to) almost 50 per cent of all foreign purchases of residential property, so aligning with NSW should cause little damage to what is clearly a very enthusiastic foreign purchasing market," the treasurer said.

About 1700 metropolitan Melbourne property owners will also face paying land tax on vacant blocks they own beside their homes, unless they stump up around $600 to consolidate titles.

Mr Pallas said the crackdown on land banking was targeted at those not genuinely using the land as part of their residence and is expected to generate around $43.6 million over four years.

"If people want to preserve a separate title they're preserving it for a reason ... ultimately to sell it, so they're land banking and we don't see any value in that," he said.

Those who consolidated purely to avoid the tax would have a "great deal of difficulty" de-consolidating to sell later, he added.

Further changes include a duty increase on luxury cars worth upward of $100,000 from July 1, expected to raise $260 million.

Victoria will introduce a 2.75 per cent gold royalty to all but small miners, in line with the rest of the country, generating $56 million over four years from January 1.

In the spending column, the treasurer has already announced $2.5 million to maintain the Fixed Threat Assessment Centre and $19 million to help the centre's mental health clinicians work with individuals identified as having extremist ideologies showing indications of radicalisation.

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