From the 2024 land tax year, a small landlord in outer Melbourne who owns a single investment unit — the kind of owner state parliament habitually calls a "mum and dad" investor — received a land tax assessment that had never arrived before. The unimproved value of the land sat at $180,000, comfortably under the old $300,000 tax-free threshold. Under the threshold that took effect from 1 January 2024, the owner now paid $975 a year in surcharge alone, on top of ordinary land tax, every year until at least 2033 (State Revenue Office Victoria, COVID Debt Repayment Plan). The arithmetic was the same one facing thousands of small investors that year: raise the rent, sell, or absorb it. Multiply that owner by the roughly 380,000 landowners who became newly liable for land tax the same year (Parliamentary Budget Office Victoria, "Victorian land tax changes: COVID Debt Levy on Landholdings," 2023, approx.), and the same calculation was being run at kitchen tables and in property manager emails across the state — with a tenant, in many cases, on the other end of it.
What the government did
Victoria's COVID Debt Repayment Plan was announced in the 2023-24 Budget, handed down by then-Treasurer Tim Pallas on 23 May 2023. The government's own accounting put the cost of the state's pandemic response — health measures, business support and foregone revenue between 2019-20 and 2022-23 — at $31.5 billion, a figure the Victorian Auditor-General's Office has separately confirmed as the amount of accumulated operating losses the state attributes to COVID-19 over that period (Victorian Auditor-General's Office, Auditor-General's Report on the Annual Financial Report of the State of Victoria: 2024-25). The plan set out to recover that amount, plus the interest on carrying it, over ten years, through new payroll and land tax surcharges legislated to run until 30 June 2033 (Victorian Budget Paper No. 2, Strategy and Outlook, 2023-24, May 2023; State Revenue Office Victoria, COVID Debt Repayment Plan).
The land tax component did two things at once. First, from 1 January 2024, it cut the general tax-free threshold on landholdings from $300,000 to $50,000 of unimproved site value, bringing more than 328,000 landowners into the land tax system for the first time (State Revenue Office Victoria, COVID Debt Repayment Plan). Second, it layered a flat surcharge on top of ordinary land tax: $500 a year for landholdings worth $50,000 to under $100,000, $975 a year for $100,000 to under $300,000, and $975 plus a 0.10 percentage point increase in the tax rate for anything above that (State Revenue Office Victoria, COVID Debt Repayment Plan). A separate absentee owner surcharge, paid mostly by overseas-based investors, doubled from 2 per cent to 4 per cent of a property's value from the same 2024 land tax year (State Revenue Office Victoria, "Understanding the absentee owner surcharge"). None of it touched the family home, which stays exempt from land tax altogether.
The land tax and payroll surcharges together were forecast to raise $8.6 billion over four years — $4.7 billion from land tax, $3.9 billion from payroll tax on businesses with national wage bills above $10 million (Victorian Budget Paper No. 2, Strategy and Outlook, 2023-24). It did not arrive alone. Victoria also replaced stamp duty on commercial and industrial property with a new annual Commercial and Industrial Property Tax — a permanent charge of 1 per cent of unimproved land value that starts once a property next changes hands, under legislation given royal assent in May 2024 (Commercial and Industrial Property Tax Reform Act 2024 (Vic)). And from 1 January 2025, the Vacant Residential Land Tax — previously confined largely to inner and middle Melbourne — was extended statewide, rising progressively from 1 per cent of a property's capital improved value in the first year of vacancy to 3 per cent from the third year on (State Revenue Office Victoria, "Changes to state taxes," November 2025). A levy billed as temporary arrived alongside a genuinely permanent new property tax and a widening vacancy levy: three expansions of Victoria's property tax base inside two years.
The strongest case
Those who gained the most from a decade of cheap money should help pay the bill
Put the government's case at its best. Property owners, and investors especially, were among the biggest beneficiaries of the years leading into the pandemic and of the emergency response that followed it: a record-low cash rate through 2020 and 2021 fed directly into land values, and Melbourne property owners built substantial, largely untaxed capital gains over that period even as renters and many small businesses came out worse off. The government made this case explicitly, arguing "it is only fair that those that did better contribute the most to the repayment effort" (Victorian Budget Paper No. 2, Strategy and Outlook, 2023-24, "Strengthening our Finances," May 2023). On that logic, a tax on land value — an asset that cannot be moved, hidden or shifted offshore — is a defensible way to recover emergency spending, and economists across the political spectrum have long treated land tax as one of the least distorting taxes available to government, because unlike a tax on income or transactions it does not discourage anyone from working an extra shift or delay the timing of a sale.
The design also has real limits built into it. The family home is exempt altogether, so the burden falls on investment property, commercial land and second homes rather than on owner-occupiers. The absentee owner surcharge is aimed squarely at overseas investors rather than resident Victorians. And unlike an open-ended tax rise, the plan carries a legislated end date — 30 June 2033 — with the government's position being that the surcharges lapse once the $31.5 billion is repaid. A government facing the largest state debt build-up in the country, run up largely to keep Victorians in jobs and out of overwhelmed hospitals during the state's own extended lockdowns, can reasonably argue that spreading the repayment across those best placed to carry it, over a full decade, beats the alternative of cutting services or leaving the debt to compound indefinitely.
The evidence
How far did the net actually spread, and how much has it raised? Victoria's Parliamentary Budget Office — a statutory, independent office that costs and audits budget measures for the state's Parliament — has published the clearest account. It estimates the land tax component of the plan touches around 860,000 landowners in total, of whom around 380,000 became liable for land tax for the first time because of the threshold cut: roughly 78,000 of them pay the $500 flat surcharge and around 302,000 pay the $975 flat surcharge, with the newly liable group paying an average of $878 in additional tax a year (Parliamentary Budget Office Victoria, "Victorian land tax changes: COVID Debt Levy on Landholdings," 2023, approx.). Over the plan's first four years, the land tax component alone is forecast to raise an additional $5.65 billion (approx.), equivalent to roughly a fifth of what land tax would otherwise have raised under the old, higher threshold (Parliamentary Budget Office Victoria, 2023, approx.).
The revenue figures in the budget papers tell the same story in dollars. "Base" land tax revenue was forecast to rise from $5.29 billion in 2022-23 to $6.08 billion in 2023-24, an increase driven substantially by the threshold cut and the doubled absentee surcharge (Parliamentary Budget Office Victoria, 2023, approx.). The State Revenue Office separately reported an additional $1.2 billion in land tax collected in 2023-24 through the plan (State Revenue Office Victoria, COVID Debt Repayment Plan) — up from total land tax collections of $4.1 billion in 2021-22, the last full year before any of these changes, out of $25.8 billion in total Victorian tax revenue that year (Victorian Auditor-General's Office, "Collecting State-based Tax Revenue," 21 June 2023). By 2024-25, land tax and land transfer duty (stamp duty) together made up $16.5 billion, or 42.4 per cent, of Victoria's own-source tax revenue (Parliamentary Budget Office Victoria, "Property taxes: state comparison of land transfer duty and land tax," 2025, approx.) — meaning close to half of everything Victoria raises through its own taxes now comes from property, just as property owners are being asked to carry an extra decade-long debt repayment on top.
A levy framed around "those who did better" now reaches renters who did not — through landlords passing on a bill Parliament wrote for someone else.
The critique
The government's fairness case rests on the idea that this tax reaches "those who did better" — well-off investors and big landholders. A $50,000 unimproved land value threshold instead catches modest investment units, small commercial premises, holiday shacks and farmland held by people who are not wealthy by any reasonable measure; unlike income tax brackets, the threshold is fixed in dollar terms rather than indexed, so as land values rise, more landholders drift above it every year without Parliament voting on it again — a form of bracket creep built into a tax sold as targeted and temporary. The Victorian Auditor-General's Office, in a report published shortly before the plan took effect, found the State Revenue Office does not regularly analyse the tax gap across its major taxes, including land tax — meaning neither the SRO nor the Parliament that legislated the levy has a clear, published picture of how evenly it is actually being applied (Victorian Auditor-General's Office, "Collecting State-based Tax Revenue," 21 June 2023).
The government's framing also assumes the people who write the cheque bear the cost. That holds for an exempt family home; for an investment property it usually does not. A landlord facing a new annual surcharge can absorb it, sell, or raise the rent, and the state's peak real estate industry body was candid at the time about which it expected most landlords to choose, warning that costs would be passed on wherever leases allowed it and that smaller investors would leave the market. Victoria's Residential Tenancies Bond Authority recorded the first annual fall in active rental bonds on its books, down 0.9 per cent to 732,125 at 30 June 2024, with new lodgements falling from 255,722 to 245,744 (Residential Tenancies Bond Authority, Annual Report 2023-24, Consumer Affairs Victoria) — consistent with fewer rentals being offered, not more. Median rents kept climbing regardless: the government's own rental report put the median metropolitan weekly rent at $580 in the September 2025 quarter, up 3.5 per cent over the year (Consumer Affairs Victoria, Quarterly Rental Report, September quarter 2025). Not every landlord can pass the tax through — section 50 of the Retail Leases Act 2003 (Vic) voids any lease clause making a retail tenant liable for the landlord's land tax — but where the law allows it, the government's own data point the way the industry predicted: toward renters, not away from them.
Nor has the "temporary" framing held its shape. The levy carries a legislated 2033 end date, but Victoria added a permanent new property tax alongside it in the same two years — the Commercial and Industrial Property Tax replaces one-off stamp duty with an annual charge that, once triggered, never expires — and extended the Vacant Residential Land Tax from inner Melbourne to the whole state, then further, retrospectively, to unimproved land vacant since 2020 (State Revenue Office Victoria, "Changes to state taxes," November 2025). Each change has its own stated rationale — activating vacant land, removing a lump-sum transaction cost. Taken together, they describe a government whose default response to a revenue problem, across three consecutive budgets, has been to widen and deepen property taxation rather than let a single fixed-term levy do the job it was announced to do.
The tax load, and who really pays
Put the fairest version of the government's case up front, in interstate terms rather than Victoria's alone: every Australian state taxes land and property transactions, land tax is one of the more efficient taxes available to any government because a landholding cannot be moved offshore or hidden from a valuer, and a state carrying the largest debt build-up in the country has to raise the extra revenue from somewhere. On that logic, leaning harder on property than other states do is a defensible, if unusual, choice about which base to tax more heavily during a repair phase. The open question is not whether Victoria taxes property — every state does — but how much further ahead of the rest of the country it now sits, and who is actually absorbing that gap.
Victoria's own Parliamentary Budget Office has run that comparison directly, benchmarking land tax and land transfer duty — together, "property taxes" — across all six states from 2022-23 to 2026-27. Victoria came out on top of every measure it tested. Combined property tax revenue per person reached $2,120 in 2023-24, against $1,646 in New South Wales, $1,343 in Queensland, and under $1,000 in Western Australia, South Australia and Tasmania — a gap forecast to widen to $2,400 per person by 2026-27 (Parliamentary Budget Office Victoria, "Property taxes: state comparison of land transfer duty and land tax," prepared 7 July 2023). Land tax alone shows the same pattern: Victoria is forecast to raise more land tax per person than any other state in every year from 2022-23 to 2025-26, at $1,051 per person in 2023-24 (Parliamentary Budget Office Victoria, 2023). Measured against the size of the economy rather than the population, Victoria's combined property tax take was equivalent to 2.4 per cent of gross state product in 2023-24 — again the highest in the country, running roughly 0.6 percentage points above New South Wales, the next most property-tax-reliant state, on average across 2023-24 to 2025-26 (Parliamentary Budget Office Victoria, 2023).
- Combined property tax revenue per person, 2023-24 (approx.): Victoria $2,120; New South Wales $1,646; Queensland $1,343; Western Australia $977; South Australia $965; Tasmania $941 (Parliamentary Budget Office Victoria, 2023).
- Property tax revenue as a share of total state revenue, 2023-24 (approx.): Victoria 16.3 per cent, rising to a forecast 17.4 per cent by 2026-27 — higher than every other state in every year measured (Parliamentary Budget Office Victoria, 2023).
- National land tax revenue rose 23.2 per cent, or $3.4 billion, in 2023-24 — a jump the Australian Bureau of Statistics attributes in part to "the COVID Debt Levy on land holdings in Victoria" (Australian Bureau of Statistics, "Insights into Government Finance Statistics, Annual, 2023-24," released 22 April 2025).
The Bureau's own national accounts corroborate the scale of the shift. Victoria's total state tax revenue — not land tax alone, but every tax the state collects — grew 14.2 per cent in 2023-24, the fastest of any large state that year and the same year the lowered threshold and the new surcharges took effect (Australian Bureau of Statistics, "Taxation Revenue, Australia, 2023-24 financial year," released 22 April 2025).
None of that settles who carries the load once it lands. Land tax is hard to avoid — a landholding cannot be moved to minimise the bill the way income or trading activity sometimes can — but that is a different claim from saying it is hard to pass on. Where a lease permits it, a landlord's rational response to a bigger annual bill is the same whether the surcharge is $500 or several thousand dollars: lift the rent to cover it, or sell and let someone else carry the holding cost — the same choice the state's own bond and rental figures already point toward elsewhere on this page. A national industry survey adds a further, independently sourced data point on the "sell" side of that choice: in the Property Investment Professionals of Australia's 2024 Annual Investor Sentiment Survey, 35.4 per cent of investors who had sold or planned to sell an investment property named rising land tax and government charges as a reason — second only to taking profits on higher prices (44.1 per cent) — and the same survey rated Victoria, alongside the ACT and New South Wales, among the least accommodating states in which to hold property, largely on the strength of its land tax settings (Property Investment Professionals of Australia, Annual Investor Sentiment Survey 2024, August 2024, approx.). That is a private sentiment survey, not a government transaction record, and it measures intention rather than confirmed sales — a real limit on how much weight it can bear. But it points in the same direction as Victoria's own falling bond numbers: a tax framed around "those who did better" is also, in practice, discouraging the supply of rental housing at the exact moment the state has the tightest rental market in a generation.
The risk to the future
A shrinking, more reluctant tax base carrying a growing debt
Two risks compound each other. The first is fiscal: Victoria is now more dependent on property taxes than at any point on record, with land tax and stamp duty supplying 42.4 per cent of its own-source revenue (Parliamentary Budget Office Victoria, 2025, approx.), even as its own bond data shows active tenancies falling for the first time and industry commentary pointing to investors leaving the rental market. A tax base narrowing in the number of active landlords, while government leans on it more heavily each year to fund a decade-long repayment, is a more fragile foundation than the one the plan was built on in 2023 — and if property tax revenue disappoints against the $8.6 billion forecast, the state faces a choice between extending the levy past 2033, cutting services, or borrowing further against a debt load already the largest of any Australian state.
The second risk is social. A levy designed to make investors and large landholders carry the cost of the pandemic has, on the government's own rental and bond data, been passed in real measure to renters who had no say in how the debt was accumulated and no capacity to spread its cost the way a landlord with several properties can. If rental supply keeps tightening while rents keep rising, the group bearing the burden of "those who did better" will increasingly be tenants who did not — the opposite of the fairness case the government made to justify the plan. Whether the 2033 sunset date holds, and whether it is followed by relief or by the next permanent property tax, will say as much about that fairness case as the levy's introduction did.