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Victoria delivers ‘Pandemic Recovery Plan’ budget

On 3 May 2022, Victorian Treasurer Tim Pallas MP handed down Victoria’s 2022-23 budget, with the aim of supporting Victorians to recover from the impact of COVID-19.

Focusing on healthcare, job seekers, education and regions, the budget includes a total of $22.2b in new spending initiatives in the lead up to the Victorian State Election on November 26.

With a budget deficit this year of $17.6b, debt is forecasted to be more than $167b by 2025-26 – equivalent to 26.5% of the state economy. However, $15b in extra taxes from the booming property market (noting the increase in tax rates last year) has helped the budget bottom line, along with a forecasted population growth of 5.5% this financial year and 3.25% next year with international migration expected to pick up again.

This budget introduces the Victorian Future Fund to pay down the state’s debts, with capital coming from VicRoad’s Modernisation Joint Venture, with a balance of around $10b expected “in the medium term”.

Key highlights

  • $12b ‘Pandemic Repair Plan’ for healthcare, including $2.9b in health infrastructure, $2.4b for additional emergency staff, $1.5b to increase elective surgeries, and $1.3b for mental health initiatives.
  • $2.6b to preparing the regions for the 2026 Commonwealth Games.
  • $1.7b to transform the Melbourne Arts Precinct.
  • $1.8b for 13 new schools and building upgrades.
  • $1b for low-interest loans and guarantees for up to 6,000 new social and affordable housing.
  • This budget provides $383m to deliver transport infrastructure as part of the Big Build.
  • A $120m Victorian Industry Fund to promote advanced manufacturing including $20m to attract companies to invest in Victoria.
  • $342m dollars to recruit police and protective services officers over two years.
  • $30m investment in a Regional Jobs and Infrastructure Fund.
  • $28m over two years to support and improve the building and construction industry.
  • $246m to fund the Sick Pay Guarantee pilot, in addition to $163m allocated for the Test Isolation Payment and Pandemic Leave Disaster Payment.
  • $109.9m for skills and training.

The Victorian Government have provided more than $13 billion to support businesses impacted by COVID-19, including grants delivered through the Business Support Fund, the Business Costs Assistance Program, the Licensed Hospitality Venue Fund and the Small Business COVID-19 Hardship Fund.

Further, the Government has emphasised its intent to make housing more affordable and re-announced the land tax concession for the build-to-rent (BTR) developers. This concession provides a 50% reduction on the taxable value of land used for an eligible BTR development, as well as an exemption from Absentee Owner Surcharge from 1 January 2022 to 31 December 2031.

We understand that the State Taxation and Treasury Legislation Amendment Bill 2022 will contain changes to the duties, land tax, payroll tax, windfall gain and tax administration legislations. While this does not appear to have been published on the Victorian Parliament website yet, we will be able to provide further comments once available.

In addition, the 2022-23 budget includes the following revenue initiatives:

Equalising Gambling Tax

Currently, electronic gaming machines (EGMs) operated by Crown Casino Ltd (Crown) are taxed at a flat rate of 31.57% of machine revenue, plus 1% for the community benefit levy. However, EGMs operated by club venues (e.g. RSLs) are taxed on a sliding scale, with the marginal tax rate from 46.7% to 60.67% (plus 1% of community benefit levy).

In accordance with the arrangements under the Casino (Management Agreement) Act 1993 (Vic) implemented between the Victorian Government and Crown, the Government was unable to increase the rates of gambling tax without paying a compensation to Crown. This obligation by the Government was repealed as a result of the Royal Commission into the Casino Operator and Licence (Recommendation 15 of the report delivered on 15 October 2021).

From 1 July 2023, EGMs operated by Crown will subject to the same gambling tax rates to ensure a level playing field for all operators. It is expected that this change will generate up to $30 million a year for the Government without increasing gambling expenditure. 

Motor Vehicle Duty Exemption for Wheelchair Accessible Commercial Passenger Vehicles

Consistent with Recommendation 8 of the Inquiry into the Multi-Purpose Taxi Program (Program) Report published in April 2022, the motor vehicle duty exemption in respect of the sale/transfer of wheelchair accessible commercial passenger vehicles is aimed to incentivise new operators in the Program. The Program is funded by the Victorian Department of Transport, whereby Victorians with permanent or severe disabilities can receive a 50% discount on taxi fares.

The exemption will apply to cars registered from 1 July 2022 if the following are satisfied:

  • the car is less than two years old and is registered with Commercial Passenger Vehicles Victoria;
  • the car is specifically converted for wheelchair access and is capable of carrying an occupied wheelchair; and
  • the car is fitted to meet the requirements to provide unbooked services (rank and hail), such as a taximeter.
Federal Budget Report 2022-23

Federal Budget Report 2022-23

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