Victoria’s election-year Budget offers handouts but dodges hard choices
Victorian Treasurer, Jaclyn Symes handed down her second Budget earlier today. It provides targeted cost of living relief but fails to address the increasing cost of doing business in Victoria or provide any relief from the significant tax burden that is now borne by Victorians, particularly property owners, investors and developers.
While much public attention has focused on cost-of-living measures, the tax settings in the Budget reveal a continuing structural problem: Victoria remains heavily reliant on a narrow base of state taxes – including property taxes – and is allowing revenue growth, rather than tax reform, to do most of the heavy lifting from a financial perspective.
The Budget projects a return to an operating surplus (around $700 million in 2025–26), even as broader cash deficits persist and net debt continues to climb. Within this framework, taxation revenue plays a central role. State tax collections are forecast to grow steadily, reaching more than $50 billion annually by 2030. In effect, it appears the government’s strategy is not to reshape the tax system, but to rely on incremental growth in existing taxes to repair the budget.
Continuing reliance on property taxes and payroll tax
The most important structural feature of Victoria’s tax system remains its dependence on property-related taxes. These include:
- Stamp duty (land transfer duty and landholder duty)
- Land tax
- Vacant Residential Land Tax
- Windfall Gains Tax
- Various surcharges (e.g. absentee owner surcharge and foreign purchaser additional duty)
Almost two years into the Commercial and Industrial Property Tax regime, which was heralded by the government as a significant reform that was intended to reduce the stamp duty burden borne by business owners, land transfer duty collections are still forecast to grow from $10.0 billion in 2026–27 to $12.4 billion in 2029–30. When this is combined with the $7.6 billion in land tax that the government expects to raise in 2026–27, it is obvious that property owners are still doing most of the heavy lifting for the government.
The only relief for the property sector in the budget is a further temporary extension of the off-the-plan duty concession for new apartments, units and townhouses until 21 April 2027. It should allow some developers to move stock that has remained unsold for some time, but is unlikely to attract any new investment into Victoria.
Payroll tax remains another major revenue pillar, expected to generate approximately $12.5 billion in 2026-27. The budget does not offer any reforms to payroll tax, or relief for the Victorian businesses that are facing increased cost pressures. At the same time, rising wage bills, especially in the public sector, are one of the largest drivers of government expenditure, creating a circular dynamic where labour both funds and pressures the budget.
Bracket creep and more debt
A defining feature of the 2026–27 Budget is its reliance on bracket creep and projected economic growth. Tax revenue is forecast to grow at roughly 5% per year, driven by:
- Rising property values (over the medium term)
- Population growth
- Wage growth feeding into payroll tax
There is a clear link between the government’s tax policy and Victoria’s debt trajectory. Net debt is projected to approach $200 billion by 2030, with the government’s interest bill rising sharply over the forward estimates period. The need to continue servicing the government’s ever increasing debt pile implies a continued reliance on increased tax collections year on year, with very little room to deliver any tax relief to businesses or property owners.
The Victorian government’s 2026–27 Budget is best described as a classic election year budget, which is big on voter hand outs and light on any significant reforms that will make a difference to Victorian businesses. The absence of any positive changes to key taxes and the complex property tax environment continue to hinder business growth and investment. Only through comprehensive reform and strategic investment can Victoria hope to attract new business and ensure sustainable economic prosperity.
