Stamp duty changes could provide Suburban Rail Loop funding stream

The Age

5 days ago

Victoria's decision to end stamp duty on commercial properties and replace it with land tax could provide the funding stream the government is seeking to fund part of the $34.5 billion first stage of Suburban Rail Loop.
Premier Jacinta Allan on Tuesday did not rule out her government carving out a portion of existing tax revenue to help pay for the project.
On Tuesday, The Age reported the government was considering whether to carve off a share of stamp duty and land taxes collected from precincts around stations across the 1.6-kilometre first stage – Suburban Rail Loop East – which would be used to pay for the project, a concept known as hypothecation.
Since a business and investment case for the rail loop was first released in 2021, the state government has maintained it can fund a third of the $34.5 billion first stage through value capture – charges or fees on the increased property values generated by a capital works project.
Some value-capture proposals floated in this document were due to begin by this year and focused on additional taxes. The state government is still finalising what options it will proceed with and how they will be implemented.
Dr David Hayward, RMIT emeritus professor of public policy and the social economy, said one key option available to the government was to harness its recent changes to commercial stamp duty.
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Under changes that took effect on July 1, 2024, the government is phasing out stamp duty for commercial and industrial properties and replacing it with an annual land tax, set at 1 per cent of the property's unimproved land value
Hayward said this automatically created a potential source of value capture within SRL precincts because land taxes would naturally increase alongside the value of commercial properties held around the stations.