INTEREST rate hikes have contributed to a half-billion-dollar fall in Victorian stamp duty revenue and neutralised the first three months of a controversial tax.<\/p>\n
A quarterly budget update, tabled in State Parliament last week, shows Victoria pulled in $164 million from its COVID-19 debt levy from the start of July to the end of September.<\/p>\n
It helped lift payroll tax revenue in the state by $366 million compared to the same time last year, but the budget boost could have been higher if not for a drop in stamp duty income.<\/p>\n
“This increase is partially offset by a $506 million decrease in land transfer duty, primarily driven by the fall in settlement volumes and transaction prices that coincided with an increase in interest rates,” the report said.<\/p>\n
At its last meeting the Reserve Bank of Australia raised interest rates by a quarter of a percentage point to a 12-year-high of 4.35 per cent.<\/p>\n
It was the first hike in five months but the 13th over the past 18 months, jacking up repayments for borrowers.<\/p>\n
Victorian businesses with a national payroll above $10 million are also facing an extra financial burden in the form of an additional tax of 0.5 per cent on their payroll from 1 July as part of the COVID-19 debt levy unveiled in the May state budget.<\/p>\n
Those with a national payroll above $100 million are paying an extra one per cent.<\/p>\n
Under the second part of the levy from January, property investors will pay a fixed $500 fee each year for landholdings worth between $50,000 to $100,000, $975 if above $100,000 and an extra 0.1 per cent for every dollar above $300,000.<\/p>\n
The levies are expected to raise $31.5 billion over the next decade, with Victoria’s net debt tipped to top $171.4 billion by mid-2027.<\/p>\n
Net debt rose $5.5 billion to $120.6 billion over the most recent quarter but the projected figure for the end of the 2023\/24 financial year is down from $135.4 billion to $133.8 billion.<\/p>\n
Total quarterly expenses were $1.8 billion higher than the same time last year, with the report recognising the government had agreed to a $380 million settlement to cancel the 2026 Commonwealth Games.<\/p>\n
The State recorded a $2.5 billion operating deficit over the quarter but the report cautioned against using the result to project the full-year outcome.<\/p>\n
Funding the operating deficit and the Victorian Government’s extensive infrastructure program were primarily responsible for total liabilities growing by $10.4 billion to $214.8 billion.<\/p>\n
The budget update suggested Victoria’s economy is performing well but acknowledged high inflation and rising interest rates were heaping cost-of-living pressures on households.<\/p>\n
Shadow treasurer Brad Rowswell hit out at what he described as a “spending spree” by the government.<\/p>\n
“Under Labor, Victoria is broke and life is getting harder as Victorians pay the price for its incompetence,” he said.<\/p>\n
A State Government spokesperson said Victoria is the only state or territory with a COVID debt repayment plan.<\/p>\n
“Our economy is strong, jobs are at near-record highs and our fiscal plan is on track,\u201d the spokesperson said.<\/p>\n