Victoria urged to adopt NSW-style land tax

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Victoria’s major parties are being urged to follow NSW and swap stamp duty for a land tax system.

The Victorian Chamber of Commerce and Industry released its 2022 state election policy platform on Wednesday, 73 days before voters head to the polls.

Its 61 recommendations include that Victoria replaces stamp duty with a broad-based land tax system, ahead of a planned tweak in NSW from next year.

From January, first home buyers in NSW will be able to choose between paying stamp duty once or opting into an annual tax on properties up to $1.5 million.

The properties would not be locked into the tax if sold.

It was a good first step and Victoria should watch the NSW system and move to adopt a similar model, VCCI chief executive Paul Guerra said.

“We don’t have to be the first. We just have to be the best,” he told reporters.

Replacing stamp duty would facilitate greater labour mobility and make first homebuyers less reticent to sell their houses within a few years of paying a large one-off sum, Mr Guerra said.

Increasing Victoria’s payroll tax threshold from $700,000 to $1.2 million to match NSW would also deter businesses from moving across the Murray River.

“We’ve got to be at least as competitive as NSW,” Mr Guerra said.

Victoria’s metropolitan payroll tax rate of 4.85 per cent is lower than NSW’s statewide figure, which reverted from 4.85 to 5.45 per cent from July 1.

It drops to 1.21 per cent for businesses in regional Victoria, with VCCI keen for it to be waived altogether.

– AAP