Prosper Australia has condemned the Victorian Government’s decision to unwind its land tax reforms, warning that the move puts short-term political relief ahead of the long-term interests of working Victorians.
Premier Ben Carroll has announced that Victoria’s land tax-free threshold will progressively return to $300,000, ultimately removing around 250,000 people from the land tax system.
Prosper Australia Executive Director Rayna Fahey said the announcement was a retreat from one of the few taxes Victoria has that falls on an immovable source of economic wealth.
“This is not tax reform. It is tax retreat.
“It is a betrayal of working Victorians to make it cheaper to hold valuable land while leaving taxes on work, enterprise and moving house in place.
“Land is not made by its owner. Its value is created by the community around it: public infrastructure, population growth, jobs, services, and government decisions.
“When that value rises, the community has a legitimate claim to a share of it.”
The Government has framed land tax relief as cost-of-living relief for Victorians. But the available data do not support the idea that Victoria needs to retreat from land taxation to get first-home buyers into the market.
In the March quarter of 2026, first-home buyers accounted for 39.1 per cent of new owner-occupier lending in Victoria, the second-highest share of any state or territory, behind the ACT.
“Victoria is already one of the strongest jurisdictions in Australia for first-home-buyer purchasing activity.
“The question is why the Government is choosing to give up a tax on land wealth rather than tackle the taxes that actually make it harder for people to move and use housing efficiently.
“The Government is asking Victorians to believe that making it cheaper to hold land is the answer to housing affordability. It isn’t.”
Prosper Australia said the Government should be focusing on the tax that directly penalises people for moving between homes.
“If the Government wants to fix Victoria’s tax system, start with stamp duty.
“A tax on moving house is a tax on people trying to move for work, accommodate a growing family, downsize, or find a home that better suits their circumstances.
“Stamp duty locks people into homes that no longer suit them. It makes it harder for young families to move, older Victorians to downsize, and workers to move closer to jobs.
“Instead, the Government is cutting a tax on land and leaving a tax on moving in place.
“That is the wrong direction.”
Victoria already provides first-home buyers with a stamp duty exemption on homes up to $600,000 and a concession on purchases between $600,001 and $750,000.
Fahey said the growing reliance on exemptions and concessions demonstrated the underlying problem with stamp duty.
“Governments keep creating exemptions from stamp duty because they know it is a barrier.
“But why should a first-home buyer be protected from the tax while a family moving because they need more space, an older Victorian downsizing, or a worker moving closer to their job is not?
“The answer isn’t more exemptions. The answer is to get rid of the tax on moving.”
Prosper Australia does not oppose reform of Victoria’s tax system. It argues that reform should move towards land-based taxation, not away from it.
“If the Government thinks the land tax system needs fixing, then fix it.
“Make it simpler. Make it fairer. Improve the treatment of different forms of landholding.
“But don’t abandon the principle that land values are an appropriate source of public revenue.
“We should be having a serious conversation about how much of Victoria’s enormous land wealth should be returned to the public, not a bidding war over who can promise to tax it least.”
Victoria’s current land tax system taxes taxable land holdings annually, while the principal place of residence is generally exempt. From 2024, the general threshold was reduced to $50,000, with the current rates applying through the 2024–2033 land tax years.
Fahey said Victoria should use the opportunity to undertake genuine tax reform rather than reverse course.
“We should make it cheaper to work, build, invest and move. We should not make it cheaper to hold valuable land.
Prosper Australia said the decision should instead prompt a broader discussion about Victoria’s long-term revenue base.
“Victoria needs sustainable revenue, not another round of temporary political fixes.
“If Victoria wants genuine tax reform, it should remove stamp duty, reduce payroll tax, and shift the tax burden towards economic rents.
“Tax the land, not the move. Tax the unearned, not the earned.
“Victoria should continue to lead Australia in making that shift.”
