State Taxation Acts Amendment Bill 2019 | Bill

Ms VAGHELA (Western Metropolitan) (14:45:23): I too rise to speak on the State Taxation Acts Amendment Bill 2019. This bill includes quite a few measures. It includes more tax cuts to help Victorian businesses and to help grow jobs, modernising motor vehicle duties, ensuring foreign property owners pay their fair share, closing loopholes and making sure that everyone pays their fair share. There are certain general taxation amendments. This bill will close some loopholes; improve the general operation of Victoria’s revenue laws; correct technical or drafting defects, remove anomalies or inconsistencies and restore the intended operation of some of the existing laws; and improve the fairness and sustainability of the tax system. Overall it will be helpful to communities not only in regional Victoria but also in the metropolitan area. The bill includes quite a few measures. In terms of the cuts, there will be an increase in the payroll tax free threshold. In its first term the Andrews Labor government delivered tax cuts which benefited almost 40 000 businesses when we increased the payroll tax free threshold from $550 000 to $650 000, and that was done in instalments of $25 000. In this budget we are increasing the threshold to $700 000, and we will be doing that—again, in instalments of $25 000—from 1 July 2021. These increases in the payroll tax free threshold will benefit about 38 000 Victorian businesses by up to $2425, and 1400 small businesses will stop paying payroll tax altogether. That is good news for those small businesses. So that was about the increase in the payroll tax free threshold. Another measure is about investment in regional Victoria, where we are going to reduce the payroll tax rate which is applicable to regional businesses. Again, like the first one here, the first term of the Daniel Andrews government delivered a massive boost to regional economies when we cut the regional payroll tax by 50 per cent. It used to be 4.85 per cent, and it has been reduced to 2.425 per cent. This is the lowest payroll tax rate in the country. The benefit of this is that it has led to the lowest unemployment rate in the country. So that was in the first term. Now we are going to provide further cuts to regional payroll tax, and it will be down to 25 per cent of the metropolitan rate. It will start from 1 July 2020 and will be implemented over three years, when the rate reduction will be 0.4 percentage points. Three and a half thousand businesses will benefit from this, and also it will support companies in regional Victoria and help in job creation. We need to remember that for the state’s economic growth we always need to consider the growth of regional Victoria as well. In addition to this we will expand eligibility for the regional payroll tax by removing the business location test. Our commitment to regional Victoria does not stop here. We are going to invest in our regions, where we will have a 50 per cent duty concession on commercial and industrial properties. This new reform will help businesses to relocate and expand in regional Victoria. This will happen via a 10 per cent duty concession, which will begin from 1 July 2019, and it will go up to a 50 per cent concession with the increase of 10 percentage points every year. This will help businesses to save, over the next four years, $69 million. Another measure which is part of this amendment bill is aligning the payroll tax treatment for parental leave. We want employers to extend paternity leave. The Labor government in 2002 made maternity leave payments an exemption. We were the first. Now we are encouraging employers to make sure that they offer paid paternity leave, and this payroll tax exemption will help to do that. This was part of the election commitment that we made at the last election, the young families package, and it will apply from 1 July 2019. Mums and dads both have a right to be with their new babies—to be at home so that they can create bonds with their newborn babies. So that was all about tax. Other measures that are part of the amendment bill are about modernising the motor vehicle duty. Victoria is a progressive state, and we want to make sure that our laws, and especially the motor vehicle duty laws, are modernised so that we support the transition to modern fuel-efficient cars and electric cars. There are a few measures that are included in this bill to do that. We will be aligning the motor vehicle duty rates above the luxury car threshold. In previous reforms the government aligned the duty rate on new and used cars below the luxury car threshold. This bill applies the same change, but it will be above the luxury threshold. That will be from 1 July. The rate on new and used cars will be the same, whether the value is above the luxury car threshold or below the luxury car threshold. As part of the amendment, we will also be increasing the progressivity of the motor vehicle duty regime. For this we will be introducing two new super-luxury thresholds, which will come into effect from 1 July 2019. The revenue raised by this will be used for the investment that we have made in our roads. On the two super-luxury thresholds, the first one is for vehicles priced from $100 001 to $150 000, and the new duty rate will be $14 per $200, which has increased from $10.40. The other threshold is for motor vehicles above $150 000, where a duty rate of $18 per $200 will apply. These changes will not have any effect on non-passenger vehicles. So it will not include any motorbikes, utes, panel vans or motorhomes. There are also new exemptions for green cars, which includes electric cars and low-emission engine cars. Owners will no longer pay a higher duty rate above the luxury threshold and will not be affected by the new super-luxury thresholds. Farmers’ passenger cars which are used in primary production will no longer have a higher duty rate above the luxury threshold. As a result, the duty rate for new green and primary producer cars above the luxury threshold will be cut to $8.40 per $200. That is a reduction from the current $10.40. There is also an exemption for service demonstrator vehicles. These vehicles will be exempt from duty when they are acquired by licensed motor car traders from 1 July 2019. These changes will ensure that service demonstrator vehicles are treated in the same way as normal demonstrator vehicles and it removes a double duty on eligible vehicles. The next amendment is about foreign property owners. We want to make sure that foreign property owners pay their fair share. At times they do not pay the wide range of taxes and charges that are paid by local property owners, but they do benefit from the investments that get made by the government. So in this bill we are including two measures which will increase the contribution foreign purchasers will make to the state budget. Currently foreign property owners do not pay any of these charges, and we will align these new charges on foreign property owners with those applied in New South Wales. Under this duty, there will be two types of charges that foreign property owners will pay. The first one is the foreign purchaser additional duty, which will increase from 7 per cent to 8 per cent, and it will apply on the contracts signed from 1 July 2019. However, contracts signed before that will be subject to whatever the current duty rates are. There are existing rules which currently apply in terms of exemptions, which help to add to Victorian property stock. Another charge is an increase in the absentee owner surcharge. Currently it is 1.5 per cent. It will go to 2 per cent, and it will come into effect from the 2020 land tax year. It does not replace any existing taxes that are in place. Those existing taxes still apply. Further to this, there are a few other loopholes that will be removed through this bill to make sure that everyone pays their fair share. It will also improve the fairness and sustainability of the tax system. To do that we have three measures. First of all, we are removing the principal place of residence exemption for contiguous land. So land that is on a separate title to someone’s principal place of residence can attract a PPR exemption if it is contiguous to their PPR and they do not have a separate residence. Our government through this bill is going to remove this exemption for contiguous land, which will come into effect from the 2020 land tax year. Doing this will discourage land banking, it will promote fairness, and when at times there are shortages of land supply this measure will help first homebuyers have their first home. But these reforms will not come into place straightaway. So if the current owners want to consolidate their titles before the changes come into effect, they can do that. These sorts of changes are going to be applicable only in metropolitan Melbourne; they are not applicable in regional Victoria. Another measure is the valuation of heritage sites. This measure makes sure that rules for valuing heritage sites are simpler and clearer. We will also restore the intended operation of the law. By doing this we will prevent the taxpayer from artificially lowering their land tax bills simply because of a heritage registration. In restoring this law we are not here to raise any revenue. Instead this is just to protect the tens of millions of dollars that would otherwise be lost through people abusing these rules. We will also remove the exemption for gold royalties. Currently there is no charge on gold royalties. So in removing this exemption a 2.75 per cent royalty will apply to the net market value of gold production from 1 January 2020. It is the same rate that is applicable to other base metals and mineral sands. There are other general taxation amendments: we are supporting the imposition of land transfer duty on the acquisition of fixtures above the value of $2 million, ensuring the duty provisions regarding economic entitlements operate effectively and fixing an anomaly in the definition of public unit trust. So in conclusion, I want to say that I commend the bill to the house.