From July 2025, Victoria’s long-standing Fire Services Property Levy (FSPL) will become the Emergency Services and Volunteers Fund (ESVF). This higher property tax will fund an expanded range of emergency services, including CFA and FRV, the State Emergency Service, Triple Zero Victoria, Forest Fire Management, and recovery services.
While the levy has increased to reflect the broader range of services it now funds, the method of raising this revenue remains largely unchanged. Yet, people are stirred up about a big new tax. Which got us asking: Is the noise proportionate to the facts?
How the levy works
The Emergency Services and Volunteers Fund will continue to be collected via local council rates, based on the Capital Improved Value (CIV) of each property. CIV includes both:
- Land value (the site itself), and
- Improvements (buildings, fences, infrastructure, etc.)
Levy rates vary by property type—residential, commercial, industrial, or farm—and include a fixed charge plus a variable amount based on CIV. There are minimum and maximum thresholds, and some exemptions apply.
The levy will be added to the annual council rates notice and subject to the existing payment options available in each council district. Payment plans and deferrals as well as discounts for pensioners apply.
A Georgist perspective on the levy
From a Georgist economic viewpoint, all government services should be funded by land values, as that is the fairest and most efficient way to collect government revenue. Our council rating system is currently the best vehicle to collect it, but given that it is being passed straight through to the State Government, having this expanded levy separately itemised on your rates makes sense. The system is administratively feasible and already supported by land valuation processes.
But the fairness of the levy could be significantly improved by shifting the tax base from capital improvements to land value alone, also known as the unimproved or site value.
Why focus on land value?
Henry George’s theory rests on a distinction between two kinds of property:
- Land, whose value derives from location and community development
- Capital, such as buildings and infrastructure, which result from private investment.
Taxing land value is seen as economically efficient because land is fixed in supply and gains value primarily due to public services, infrastructure, and demand pressures, not the actions of the landowner. Conversely, taxing improvements can discourage investment, reduce housing supply, and penalise productive activity.
There has been some criticism that this levy should simply be funded from general revenue instead of an extra levy. But if we look at where general revenue comes from in Victoria: it’s property and payroll taxes. So shifting this levy onto rates actually reduces the pressure on private industry to fund the services that all Victorians benefit from.
Taxing land is fair because land-owners are the primary beneficiaries of these services. Historically, fire services were privately owned. But people came to realise the problems that arose when fire companies would only put out the fires of their customers. So the idea of a public fire – or any emergency service – as a commons service made a lot of sense.
However, the funding of these services has been ad-hoc and inconsistent between services. Despite this new levy, Victorians still have to pay a separate fee for ambulance services – either through health or ambulance cover. The initial FSL recognised that all land and property owners benefited from fire services so instead of paying through insurance, it was fairer to pay through a universal levy.
The politics surrounding the introduction of the FSL were easier because it replaced a tax on property insurance, which wasn’t paid by everyone. This time around the levy isn’t directly replacing another tax, and is being implemented at a difficult time due to cost-of-living, and drought pressures. Which is a good lesson on the importance of transition management in any tax reform process.
Practical implications of a CIV-based levy
A levy based on capital improved value has one major negative implication. Owners who renovate, rebuild, or add productive infrastructure (like farm equipment sheds or irrigation) generally face higher levies.
By comparison, land owners who keep their property vacant pay less, creating an economic incentive to delay development. This leads to inequitable outcomes, as two neighbouring properties on similar land may face very different levies if one is heavily improved and the other is not.
This effect is not unique to emergency services funding; it also appears in broader municipal and state-based property taxes. Prosper has been campaigning for Site Value Rating for council rates for decades, as we believe it is the fairest way to collect tax.
Impact on regional and urban property owners
The hot topic surrounding the ESVF has been the rural/urban divide. The details of this particular levy and its implementation have been very muddied here, and we are disappointed (although not unsurprised) to see the levels of misinformation swirling around this debate.
Stories of farmers receiving tax bills in the tens of thousands have been oft repeated, yet we have been unable to verify any real examples of this being a result of the levy. There are examples of farmers owning property under multiple titles across a single farm business. This could have resulted in multiple levies being charged however the legislation has allowed for this and farmers can apply for exemptions if a single farm business covers multiple properties.
Devils in the details
While we support the levy in principle, in practice we have a couple of key concerns regarding its implementation.
Firstly, the ESVF contains a fixed charge as well as a variable rate. Fixed charges benefit large landowners as they represent a smaller proportion of the total levy relative to property value, effectively reducing their overall tax burden compared to owners of lower-value land.
Compare a primary production property valued at $500,000 vs the neighbour valued at $1,000,000:
|
Property Value |
Variable Component |
Fixed Charge |
Total Levy |
|
$500,000 |
$500,000 ÷ $1,000 × $0.718 = $359 |
$275 |
$634 |
|
$1,000,000 |
$1,000,000 ÷ $1,000 × $0.718 = $718.00 |
$275 |
$993.00 |
You can clearly see that the land owner with the higher property value is not paying a proportional levy, and this is due to the fixed charge. A simple increase in the variable rate and removing the fixed rate could address this inequity very easily.
“All taxes upon land should fall on the value of the land itself, not the manner in which it is used.” Henry George
The second equity issue arises when we add the differential rates into the mix:
|
Property type |
Property Value |
Variable Component |
Fixed Charge |
Total Levy |
|
Residential |
$1,000,000 |
$1,000,000 ÷ $1,000 × $0.173 = $173.00 |
$136 |
$309.00 |
|
Primary Production |
$1,000,000 |
$1,000,000 ÷ $1,000 × $0.718 = $718.00 |
$275 |
$993.00 |
|
Industrial |
$1,000,000 |
$1,000,000 ÷ $1,000 × $1.33 = $1,330.00 |
$275 |
$1,605.00 |
Land values arise from community activity and public investment, not individual effort. Therefore, the just and efficient source of public revenue is the location value of land, not how people use or improve that land.
From this standpoint:
- A productive farmer with sheds and irrigation is adding value through labor and capital, which should not be taxed.
- A vacant residential block in the city, rising in value due to infrastructure and demand, represents unearned gain, which should be taxed.
If we also factor in the issue of CIV compared to SVR in relation to industrial property, the issue of equity becomes even more significant. Consider two equal blocks of industrial land valued at $1,000,000, but one block is vacant, and one block has $3,000,000 worth of buildings and infrastructure in place:
|
Property Value |
Variable Component |
Fixed Charge |
Total Levy |
|
$1,000,000 |
$1,000,000 ÷ $1,000 × $1.33 = $1,330.00 |
$275 |
$1,605.00 |
|
$4,000,000 |
$4,000,000 ÷ $1,000 × $0.287 = $5,320.00 |
$275 |
$5595.00 |
Under a CIV, the fixed charge is less of an issue, but the differential rate is vastly different between the two properties. The disincentive to develop land becomes very real and harmful to our economy at this scale. Site Value taxes help to ensure best use of land, but CIV taxes punish business types disproportionately, especially capital-intensive businesses like manufacturing. Those businesses cannot easily move to another location, so unfair taxes can mean the difference between thriving or not surviving.
For Victoria to be competitive on the national and global stage, we need to ensure that our tax system rewards the right economic activity. Innovation cannot thrive in conditions where production is punished and speculation is rewarded.
Charging more to those who use land productively (like manufacturers) and less to those who hold valuable land without improving it would be, to Henry George, an inversion of justice.
Making the levy better
The expansion of this levy provided an opportunity to make some sensible reforms – and indeed, the updated framework will help prepare Victoria to face the rising rate of emergencies we face in an increasingly unstable climate.
Top of the list of improvements are the rebates available for emergency services volunteers. We all need to contribute – whether that be with money or time. A system that values both, speaks to our community spirit and will encourage more volunteers to join these critical services.
However, the inherent inequity issues in the design of this levy have remained unchanged.
We hope to see the levy amended again in the future and strongly advocate a transition to a SVR model.
A transition to a SVR-based levy should include:
- Deferrals: There are times when business or life gets really difficult and there needs to be deferment options available. No one should lose their assets or face further costs for short-term cashflow issues.
- Tax shifting: For industries with high land use as well as high labour costs, payroll tax concessions could be utilised.
Such a reform should be designed to maintain revenue neutrality while improving economic incentives and horizontal equity.
Victoria’s Emergency Services and Volunteers Fund performs a vital function—but its current structure, based on capital improved value, may unintentionally punish business and farmers and shift costs away from high-value landowners.
Switching to a site value levy would be fairer and more efficient because people who benefit the most from public services and valuable land would pay their fair share to support emergency services.
As Victoria continues to upgrade its emergency services, there’s a good chance to fix the way we pay for them so it’s fairer, makes more sense, and works better in the long run.
—
Prosper Australia advocates the taxation of land and natural resources instead of production as the most fair and efficient way to pay for the services and infrastructure we need in a thriving economy. You can read more about our Tax Shift ideas here.
