Australia’s number one Houdini politician, Victorian Premier Dan Andrews, has slammed two groups (who’d never vote for him) to pick up the bill for pandemic lockdowns, which the state became infamous for in 2020 and 2021. Dan’s actions brought back memories of the former Hollywood actor-turned US President, Ronald Reagan, but more on Ronnie and Dan later.

Recall how Victorians were outraged about how they were locked up, but when it came to getting even with Mr Andrews, they voted him in again.

And yesterday’s budget underlines just how smart DA is, with business and property investors to be targeted with an $8.6 billion tax slug to help paydown the debt that escalated during the pandemic lockdowns, when a big chunk of the Victorian economy was closed down.

The Victorian Treasurer Tim Pallas has tagged it the COVID-19 debt levy, with the AFR telling us that $3.9 billion will come from businesses with that payroll tax, and $4.7 billion pulled out of the bank balances and pockets on property investors over the next four years.

The policy is simply “those most able to pay” will shoulder the bulk of the debt levy, which in total will be in for 10 years and is expected to rake in $20 billion.

Property investors owning land worth $1 million will pay an extra $1,675 land tax, but of course family homes will be exempt. Families vote for Dan!

The new land tax will add 380,000 new taxpayers, taking the total to 860,000 Victorians who pay the price for investing in rentable or business properties. About 4,000 businesses will have a new curve ball to deal with at a time when the economy is slowing and a possible recession can’t be ruled out.

Levies have become popular in Victoria, and I guess other state Labor premiers could learn from Dan, who hit big companies such as Telstra, BHP, Wesfarmers and Coles with a mental health levy in 2021, which gave the Government $3 billion.

The AFR reports that the ANZ paid $3.4 billion via a range of taxes and levies to public coffers, many of which were not charged in NSW and Queensland.

The Victorian Chamber of Commerce and Industry chief executive Paul Guerra thinks Dan is treating business and property investors as walking talking “ATM cards”, while tax policy manager at CPA Australia, Elinor Kasapidis, thinks many landlords could face dire straights. “Many landlords will be unable to afford this additional cost. On top of wall-to-wall rate hikes for nearly a year, this additional cost will push some mum and dad landlords into the red,” she told the AFR. “To foot this bill, they will be forced to increase rents at a time when there is a national housing affordability crisis.”

In a smart play, Premier Andrews and his Treasurer have said households and small businesses will be protected, with the latter helped by the raising of the payroll tax threshold from $700,000 to $1 million over the next two years.

And this is how property investors will be hit: “The government will also raise $4.74 billion over the forward estimates by cutting the tax-free threshold for land tax from $300,000 to $50,000, imposing new yearly flat fees and increasing the rate of tax payable on properties over $300,000 by 0.1 percentage point.” (AFR.com)

Two aspects of this Victorian Budget play create concerns for non-Victorians.

First, this adds to the nation’s inflation rate as big companies slugged will up prices to try and preserve profits, and this will keep the pressure on the Reserve Bank to inflict more rate rises.

Second, only Tasmania doesn’t have a Labor government, so Dan the taxman could easily be seen as the guy to copy by other premiers, and they too could become inflation-stokers.

On a Victorian point of view, I feel for those businesses that battled and made losses during the pandemic and who are now getting back on their feet, after avoiding bankruptcy and closure. Now Dan and Tim have rewarded these survivors with a more taxing load to carry.

It's a tough policy for the affected groups but clever politics from a very shrewd politician. Former US President Ronald Reagan once observed: “It has been said that politics is the second oldest profession. I have learned that it bears a striking resemblance to the first.”

He also reminded us that: “Government is like a baby. An alimentary canal with a big appetite at one end and no sense of responsibility at the other.”

I haven’t used these quotes for 20 years, but after looking at Dan’s work, they seem terribly timely.