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  • The Victorian government's mental health tax is set to become law

    Author: AAP

A new tax on business to help fund a rebuild of Victoria's mental health system has passed the state's upper house 24-14.

State Taxation and Mental Health Acts Amendment Bill 2021 passed the Legislative Council 24-14 and will now go to the governor for royal assent.

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Eight of the state's 11 crossbenchers voted with the Labor government to pass the bill.

Under the Mental Health and Wellbeing Levy, businesses that pay more than $10 million in wages nationally will pay an additional 0.5 per cent surcharge from January 1, 2022.

Businesses with national payrolls above $100 million will pay one per cent.


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Treasurer Tim Pallas has said the tax will affect less than five per cent of employers and is anticipated to raise almost $3 billion in four years.

The levy was a main recommendation of the state's mental health royal commission, which found the state's system operates in crisis mode, fails patients and requires a complete rebuild.

The bill stipulates that all revenue collected by the levy must be spent on the provision of mental health services.

"We are committed to making a difference to the lives of Victorians through better mental health support, whether that's through access to health providers, counsellors, therapists, support, suicide prevention, education programs," Attorney-General Jaclyn Symes told the upper house.

Reason MP Fiona Patten, who voted in support of the levy, said poor mental health costs the Victorian economy more than $14 billion each year, including a direct cost to employers of $1.9 billion.

"I don't think there's many Victorian who would not say we need to fix our public mental health system and we understand it needs money to do that," she said.

Shooters, Fishers and Farmers Party MP Jeff Bourman supported the bill while maintaining he was "not a fan of new taxes".

"If you're going to increase the services, then it's got to come from somewhere," he said.

An opposition attempt to amend the bill to exempt universities from the new levy failed to garner enough support.

Opposition spokesman for higher education Matt Bach said universities had been dealt a "devastating blow" by the coronavirus pandemic and subsequent loss of international students.

"Universities have been crippled, they're on their knees," the former teacher said.

Mr Pallas said the Victorian government has provided more than $1 billion to assist universities throughout the pandemic and would continue to support the sector.

The bill also introduces a premium stamp duty rate of 6.5 per cent on transactions above $2 million, as well as increases to land tax on investment and commercial properties.


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