Victorians are shouldering the biggest state and local government tax burden in the nation as the state struggles to cope with booming population growth and rising costs for basic services.
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The combined state and local tax haul surged to more than $21 billion in 2013-14, up from about $12.6 billion a decade earlier in 2004-05.
That was equivalent to 6 per cent of the state economy, the highest on record and the highest state rate in the nation.
An analysis by The Age shows the increase in council rates over the past decade has been particularly steep. In 2004-05, councils collected about $2.2 billion, equivalent to just 1 per cent of the state economy.
But by 2013-14, the tax burden imposed by councils had leapt to more than $4 billion, equivalent to 1.2 per cent of the state economy.
Collections of state taxes imposed on workers, property, gambling, vehicles and various other transactions have also grown sharply. In 2004-05, the former Bracks government netted about $10.4 billion, equivalent to 4.6 per cent of gross state product. But this increased to almost $17 billion a decade later during the Napthine government’s final financial year, equivalent to 4.9 per cent of the economy.
The Andrews government has announced plans to stop councils raising rates beyond the level of inflation from July next year, unless otherwise approved by the Essential Services Commission. But councils have warned this could merely force them to sack staff, or cut spending maintaining local infrastructure such as roads and pools.
Municipal Association of Victoria chief executive Rob Spence said councils were facing pressures from rising labour costs.
Strong population growth, congestion, rising demand for aged care services, rising demand for early childhood services and high construction and maintenance costs had added to that pressure, he said. But in rural areas, declining population is creating different pressures, with revenues down but costs remaining high given the need to maintain infrastructure.
The figures confirmed that when local and state taxes are combined, Victorians bear the biggest tax burden in the nation.
Local and state government taxes accounted for 5.7 per cent of the NSW economy, 5 per cent in Queensland, 5.6 per cent in South Australia, 3.9 per cent in WA and 5.2 per cent in Tasmania.
