April 24, 2016 / 6:18 AM / 3 years ago

Australian state hikes taxes for foreign property buyers

SYDNEY, April 24 (Reuters) - Australia’s southeastern state of Victoria, home to the city of Melbourne, will more than double property taxes for foreign buyers and treble royalties from coal, the government has announced.

The hike in stamp duty on residential properties purchased by foreigners appears to run counter to a warning earlier in the month from the central bank that recent rapid rises in property prices could stall if international demand, particularly from China, slipped.

China is Australia’s largest source of foreign property investment, according to the most recent annual report from Australia’s Foreign Investment Review Board.

The stamp duty will rise to 7 percent from 3 percent from July 1, Victoria’s treasurer Tim Pallas said in a statement outlining state budget measures on Friday.

“It’s only fair that foreign buyers of residential real estate, who enjoy the capital growth as a result of Victoria’s liveability and the amenity of our cities, contribute to the maintenance of government services and infrastructure,” he said.

Surcharges on foreign property ownership have been in place since July 2015 and have had “little impact” on foreign demand for Victorian dwellings, the Victorian government said in the statement.

House prices in Melbourne, the state capital, have increased 8.3 percent over the past 12 months, according to figures published by Real Estate Institute of Victoria, an association of real estate agents.

In a separate statement on Saturday, Pallas said Victoria will increase the brown coal royalty rate three-fold from Jan. 1 next year.

The measures are projected to raise A$738 million ($568.63 million) for the Victorian government. ($1 = 1.2979 Australian dollars) (Reporting by Tom Westbrook; Editing by Christopher Cushing)

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