The Southeast Melbourne Manufacturers Alliance (SEMMA) challenges the response from the government’s land valuation body – Valuer General Victoria (VGV).
Comment from Honi Walker – CEO, SEMMA
In what has become a roundabout, SEMMA has discovered that the VGV uses contracted valuers who use a complex calculation with variances of statistical tolerances as part of their formula.
Suffice to say, you need an economics degree and a degree in land valuation to work out these increases.
While the VGV director did commit to full disclosure in the valuation process, he did note that it comes with a 10 per cent buffer and noted that there were ‘significant variations of industrial properties.’ Of course, we will have to work through the information on their website to understand the process.
Parliamentary Inquiry into Land Tax process
SEMMA is calling for a cap on increases in Land Tax and a cap on Land Valuations if we cannot be exempt. SEMMA CEO Honi Walker said, “These increases have been felt across our entire membership base and the affects will be felt at the consumer level when we are forced to increase our prices to cover these tax hikes. If you thought the cost of living was high now – just wait until manufacturers and the supply chain pass on their land tax increases. It just doesn’t pass the pub test.”
“There is no justification for these increases in Land Value. It’s a tax grab from a government that is drowning in debt.”
“SEMMA believes manufacturers should be exempt from this Land Tax increase as we are part of an essential service, and our Sovereign Capability may be at risk,” Walker said.
SEMMA is consequently encouraging all members to appeal their assessments.
Background
In a survey to SEMMA members, 100 per cent of respondents said they were facing extreme increases in Land Tax from last year.
SEMMA’s survey revealed one member’s tax bill in 2023 with the Land Value in Dandenong at $3.75m and Land Tax was $47,100. In 2024 Land Value increased to $4.3m and Land Tax jumped to $66,100.
Another Member located in Hallam, their land was valued at $4.2m in 2023 with a Land Tax of $58,575 and in 2024 it jumped a staggering 55 per cent in valuation to $8.5m with a Land Tax of $177,400.
Another member example 2023, one of the members’ Land Value was $4.1m and Land Tax was $56,407. In 2024, the Land Value is now $6.35m with a Land Tax of $120,425. That’s over 50 per cent increase.
“Manufacturers are being gouged by the state government. We kept the state’s economy going during COVID as manufacturing was designated an essential service”, said Walker.
“We continued to pay ever-increasing taxes – (land, payroll, FBT, PAYG, Capital Gains Tax, GST and Company Income Tax) plus an increase in Work Cover premiums in some cases over 70 per cent – you name it, we paid it. And we did not receive any government hand-outs to keep our doors open, unlike other industries that are now closing for a range of reasons.
“Now we are being asked to cover a debt that we did not create. There is no justification for this Land Tax increase on manufacturers,” said Walker.
“Manufacturing cannot continue to cover the government’s COVID debt burden. Manufacturers are being penalised for running profitable businesses – businesses that are the engine room of our state’s economy.
“Our members, if forced to pay these unwarranted taxes have said it will impact their ability to employ more people, invest in capital equipment and may even be forced to close, causing huge job losses. Companies may even reconsider establishing new businesses in Victoria with taxes this high. We are the most taxed state in Australia,” said Walker.
No clear responses
The VGV and government could not provide clear responses to the following asked by SEMMA:
1. Can the government provide transparent reasoning and evidence behind the substantial increases in land values and consequent land tax burdens on local manufacturers, particularly those exceeding 50 per cent within a year?
2. How does the government justify imposing such significant tax hikes on manufacturers, who have been essential to the state’s economy during the COVID-19 pandemic, especially considering they did not receive government support while continuing to operate and contribute to economic stability?
3. What measures has the government taken to ensure fairness and accuracy in the calculation of land values and land tax, particularly for manufacturers who may be disproportionately affected by sudden and steep increases?
4. Considering the concerns raised by SEMMA about the potential negative impacts of these tax increases on employment, investment, and the viability of manufacturing businesses, what strategies does the government have in place to mitigate these effects and support the sustainability of the manufacturing sector?