Big business is set to be slugged with a new tax to help repay billions of dollars worth of emergency funds borrowed by the Victorian government at the height of the Covid-19 pandemic.
Victoria’s treasurer, Tim Pallas, on Tuesday afternoon will hand down his ninth budget, which will detail a “Covid-19 debt repayment plan” that includes new revenue measures and savings to get the state’s borrowings under control.
Guardian Australia has confirmed this will include a new levy on “big business” – though it remains unclear how many businesses will need to contribute.
It comes after Pallas introduced a “mental health and wellbeing levy” in the 2021 budget to fund reforms to the state’s mental health system.
Businesses that pay more than $10m in wages nationally must pay that levy through a payroll tax surcharge of 0.5% for their Victorian employees. Businesses with national payrolls above $100m pay 1%.
The levy was fiercely opposed by industry groups and the opposition at the time, though Pallas maintained it was appropriate that businesses which benefited during the pandemic be asked to make substantial contributions in its wake.
In a separate measure likely to be welcomed by business groups, Pallas on Tuesday morning announced landmark reform to abolish stamp duty for commercial and industrial properties.
The lump-sum stamp duty system for these properties will transition to an annual property tax from 1 July 2024, which he said will “help businesses expand and create new jobs”. The new tax will be 1% of the land’s unimproved value.
For first purchasers of commercial or industrial properties, there will be a choice between paying the property’s final stamp duty liability as an upfront lump sum, or transition to an annual payment by opting to pay fixed instalments over 10 years equal to stamp duty and interest, with a government-facilitated transition loan.
“Business and industry have told us they want this reform and we’ve listened. These landmark changes will enable businesses to be more dynamic and agile, and to grow and employ more workers,” Pallas said in a statement on Tuesday.
“We’re removing barriers to larger investments, accelerating business growth and helping our economy grow even stronger.”
On Monday night, the government announced it would deliver a $1bn surplus in 2025/26 – an improvement on the $900m forecast in the pre-election update in November – and another $1.2bn surplus the following financial year.
But it did not confirm the figures for the 2023/24 or 2024/25 financial years or release information regarding the state’s total debt, which was forecast in November to surge from $116bn in 2022/23 to $166bn by 2025/26.
The deputy premier, Jacinta Allan, said on Monday measures to pay down the Covid debt would not impact families.
“This will not be something placed on hardworking families who’ve already gone through a really difficult 12 months with 11 interest rate rises,” she said.
The budget will also include $140m for Aboriginal-led children and family services, which the premier, Daniel Andrews, vowed to reform immediately after he was sworn in for a third term in December. The sector has also recently been scrutinised by the state’s truth telling commission.
The package includes $64m to expand the Aboriginal Children in Care program which will ensure more than 750 additional First Nations children can be included.
