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24 November 2021
Victoria’s peak farming organisation believes a State Government Windfall Gains Tax will hurt regional Victoria and farmers.
Victorian Farmers Federation president Emma Germano said the new tax ‘on rezoning’, which past State Parliament last week, would slow housing development with flow-on effects to farmers.
“This tax could not come at a worse time for regional Victoria, which is suffering from a housing crisis. Across all industries there are job vacancies because we do not have enough houses for working families to live in,” she said.
“This is having a particular impact on farm businesses, where we have been feeling the effects of worker shortages since well before the COVID-19 pandemic hit.
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“The tax will hurt regional Victoria because in the attempt to avoid it, developers will look to invest either in outer metropolitan Melbourne or interstate.”
The new tax comes with major Wimmera municipal councils having clearly identified a need to address housing shortages.
Ms Germano also described the new tax as a tax on farmers wanting or forced to sell their land.
“Farmers who have planned for their retirement, or who have been caught out by urban sprawl and are forced to sell their property, will still have to pay this tax,” she said.
“For a farmer looking to relocate their business, that’s particularly unfair and could lead to them having to leave agriculture altogether.”
Ms Germano said the government had also failed to explain how the tax might affect any Commonwealth capital-gains liability.
“Typically, the Australian Taxation Office allows for land taxes to be added to the cost base of land, which in turn decreases the amount of capital gains tax paid when the land is sold,” she said.
“In bringing in a new tax, the Victorian government had a responsibility to describe how it would interact with capital gains to ensure landowners were not being double taxed. But they refused to give any answers.
“That is why I have written to the Federal Assistant Treasurer and Minister for Housing Michael Sukkar seeking clarification over how this new tax will be treated when calculating capital gains tax liabilities.”
Ms Germano said the VFF would also ask the Federal Government what action it proposed to help address a Victorian regional housing crisis.
Derryn Hinch’s Justice Party Member for Western Victoria Stuart Grimley said he opposed the tax and supported a proposed change to the Bill that would have capped the tax rate at a similar level to growth areas infrastructure contribution, or suburban tax.
He said the change would have given regional areas a level playing field.
He said under the tax scheme, landowners who had their agricultural land rezoned to residential would be taxed up to 50 percent on their profit.
“For example, a farmer owns 200 acres of land valued at $2-million, with each acre worth $10,000. If that land gets rezoned to residential land, each acre could now be worth $100,000 and the total land worth $20-million. The Windfall Gains Tax will allow the government to take 50 percent of the uplift in land value, or $9-million in this case,” he said.
“While we support money going back to the people, this arrangement would potentially make it less appealing to develop land in regional areas. Areas subject to the growth areas infrastructure contribution, which are mainly around the outskirts of Melbourne, are exempt from the new tax.
“During a time when housing availability and affordability in regional areas is in crisis, the government should be incentivising development in regional Victoria, not making it less attractive.”
Nationals leader and Opposition representative for regional Victoria Peter Walsh said the tax dealt a devastating blow to the future of the next generation of Victorians trying to own or build their first home.
“This tax will be passed on to the people who can least afford it – young Victorians and Victorian families who have spent their life carefully saving to build or buy their own home,” he said.
“This is the worst possible time for the Labor government to be making it harder and more expensive to get into the housing market.”
Mr Walsh said Urban Development Institute of Australia chief executive Matthew Kandelaars told media the tax increase would ‘drastically’ push up house prices.
“The experts are saying Labor’s tax will cost regional Victoria at least 2700 new homes, 9500 direct jobs and more than $2.7-billion in lost economic output,” he said.
“Regional councils have condemned the tax as a handbrake on development that will further compound the housing-supply shortage. Instead of new taxes, the government should be adopting the Nationals’ plan to fast-track 50,000 new regional lots to market by boosting skills resources at rural councils and untangling the ministerial approvals process.”
The entire November 24, 2021 edition of The Weekly Advertiser is available online. READ IT HERE!
The entire November 24, 2021 edition of AgLife is available online. READ IT HERE!