A report by (Property Council of Australia) of Australia`s real estate Commission said the state`s decision to raise the surtax on foreign investors` purchases of real estate to 7 per cent cost the state A $740 million in investment and employment. The state plans to cut the cost in next week`s budget.
According to a report by the consulting firm AEC Group for the Victoria Branch of the real estate Commission in Australia, Victoria government raised the surtax from 3 per cent to 7 per cent in 2016, when FIRB (Foreign
Investment Board, Australia`s Foreign Investment Review Board) approved residential purchases fell 73 percent, and approved commercial real estate purchases fell 17 percent.
The report does not mention other possible reasons for the decline in foreign investment, such as China`s government strict control over the amount of remittances from underground banks to foreign countries.
The decline in foreign investment activity led to a decline in the state`s gross domestic product of A $4.6 billion to A $7.4 billion, and the number of full-time jobs fell by 37500 to 60400.
Matthew Kandelaars (Matthew Canderland, deputy executive director of the committee`s Victoria branch, said: "this surtax has driven foreign investors out of Victoria, and foreign investors` purchases have fallen sharply, which has had a huge impact on Virginia`s economic. "
The falling real estate market in Victoria prompted government to cut its forecast for stamp duty revenue, the main source of revenue for government, in December, and the state`s government said it would cut it again in its annual budget next week.
This week, the real estate industry warned government, Victoria, not to use congestion taxes on CBD parking to generate more revenue, as the industry lobbied government to cut transfer tax surcharges to boost foreign investment.
Victoria is not the only state in Australia to introduce surcharges from foreign buyers. In July 2016, the new state charged a 4 percent additional tax fee and raised it to 8 percent in 2017, angering many developers.
