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Few would notice the narrow garden bed that borders the car park of Werribee’s Bridge Hotel.
But the 18-square-metre strip, which features a row of gum trees, shrubs and a grey electrical services box, attracted more than $70,000 in land tax bills over three years and has become the unlikely focus of a multimillion fight between Wyndham Council and the state government.
Between 2021 and 2023, the State Revenue Office sent the garden owner, Wyndham City Council, an annual land tax bill, totalling $22,804 in 2021 and rising to $25,386.50 in 2022 and 2023.
The Watton Street garden bed is now part of a multimillion-dollar tax row with Wyndham formally objecting to what it calls a “greedy tax grab” on more than 20 council-owned parcels of land including drainage channels and power lines.
The disputed list of “properties” also includes not-for-profit kindergartens and maternal and child health centres, community sports fields, an animal pound, land reserved for telco towers and public parks bequeathed to council by developers.
The council has also called for the Auditor-General to investigate whether land tax is being improperly imposed not just on Wyndham, but across all 79 Victorian councils.
Wyndham is seeking a refund of $5.359 million it paid in land taxes on more than 20 properties between 2021 and 2023. It is yet to receive a land tax assessment on the same parcels of land for 2024 and 2025, and is requesting the tax for those years be waived.
Wyndham mayor Josh Gilligan said the council was being taxed millions of dollars on properties from which it accrues no revenue, robbing it of vital funds for essential services.
“Ratepayers are being double-taxed on kinders, sporting ovals and garden beds and the state needs to end their greedy tax grab immediately,” he said.
“We estimate that there are millions of dollars of taxes sitting on balance sheets of government agencies and councils across Victoria that have been paid that will need to be refunded,” he said.
The largest disputed tax bill – $4.3 million – is for 62 hectares of land earmarked for a future 8000-lot suburb built around a 15,000-seat rectangular sports stadium in Tarneit. The public-private partnership between Wyndham and Western Melbourne Group, the owners of A-League club Western United, stalled last year as the soccer club had its competition licence revoked, and the Australian Tax Office pursued its owners over a $15.5 million debt, which was repaid in January.
According to the council’s objection, Wyndham entered into a caretaker agreement with a local farmer to crop the Tarneit land, maintain firebreaks and control noxious weeds. The State Revenue Office’s tax assessment was triggered when the farmer was paid for the sale of his crops, even though the council received no revenue from the sale.
The council is also disputing a $19,837 assessment it received in 2023 for Wyndham Harbour, a Werribee South marina built on Crown land and managed by council under a 99-year lease.
The Age submitted detailed questions to the State Revenue Office on why these parcels had been assessed as liable for land tax. A spokesperson said the office was unable to comment on individual tax matters.
“Land owned by a municipality is exempt from land tax as long as the land is not used for business purposes, although some exceptions apply,” the spokesperson said.
Dr David Hayward, Emeritus Professor of Public Policy and the Social Economy at RMIT University, said the dispute indicated Wyndham council was trying to regain some control over its revenue after 10 years of government-imposed rate capping.
Victorian councils argue that the state government’s ongoing rate capping policy is constraining their ability to deliver services. A parliamentary inquiry found last year that rate capping is threatening their financial viability, but also delivering lower rates to about 40 per cent of ratepayers.
“It’s easy for the state government to say, ‘We’re capping rates to support cost of living’, which is true, but it’s pretty tough on councils, so I wouldn’t be surprised if there are a lot of these little conflicts popping up because their main source of revenue is obviously rates, and they’re not in control of them,” Hayward said.
The disputed sum is a small fraction of Victoria’s total land tax take: $9.254 billion in 2024-25, rising to $10.098 billion this financial year, according to Parliamentary Budget Office analysis published this month.
“It’s small in terms of the total revenue for the state, but for a cash-strapped council $5 million is a lot of money,” Hayward said.
Municipal Association of Victoria president Cr Jennifer Anderson said continued scrutiny of the land tax system was important, to ensure exemptions for local government remained fit for purpose.
“The local government sector remains committed to working constructively with the State Government to find a fair and workable approach to land tax that benefits the communities we both serve,” Anderson said.
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Adam Carey is senior city reporter (suburban). He has held previous roles including education editor, state political correspondent and transport reporter. He joined The Age in 2007.Connect via X or email.From our partners
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