Well, you really do learn something new every single day. I live and breathe. Politics, political commentary is my thing.

I’m breathing policy and taxes and all the details. And yet, even so, someone like me can still be caught out and go, “Hang on, I didn’t realize that that was true.” True. And one such thing happened when I was listening to former Victorian MP Geoff Shaw talking on Joel Jammal’s show and he made a comment that sent me down a rabbit hole of research and made me discover that actually the Victorian windfall gains tax is so much worse than what I actually already thought it was. And that’s saying something cuz I already thought it was pretty bad. I’ve invited Geoff Shaw on to the Topher project. Geoff, thank you so much for joining me.

[From video] Thanks Topher. Thanks for having me. Good to see you. [End video]

And thank and thank you for teaching me something new. We were just chatting before we recorded about the fact that your background is actually tax and I guess that’s probably why you’re as across the details of this as what you are. Can you explain to us the the the windfall gains tax? There’d be some people who have perhaps never even heard of it. Can you explain what this tax is and crucially how it functions because this is the bit that blindsided me.

[From video]

Well Topher, it wouldn’t surprise me that people don’t know about it because there’s been over 60 taxes that have been increased or released under this government and and people have got their own lives to deal with. They got they got things going on and when attack doesn’t affect you then you don’t worry about it. [End video]

I’m sorry to interrupt my interview with Geoff Shaw. We’ll get back to him in just a moment. But first, my name’s Topher Field. This is the Topher project and this is what I do. I bring you stories and interviews that help busy people like you to make sense of the nonsense that surrounds us. And boy is this windfall gains tax a bunch of nonsense. It actually gets worse as we get further through this interview and Geoff helps me to understand a few more things that I didn’t previously understand. But we’ll get back to that in a second. I am 100% viewer supported. So if you appreciate what I’m doing here at the Topher project, then please buy me a coffee via the button at topherfield.net. And if you like my videos and my interviews, then you’re going to love my books. They’re all about law, government, civil disobedience in the modern age. That’s what this one’s all about. And this one is all about the theology of civil disobedience. Good Christians break bad laws. You’ll also find my DVD of Battleground Melbourne, my multi-award-winning documentary, and also my merch in a range of different designs, in t-shirts, and in hoodies. And all of that is available at goodpeoplebreakbadlaws.com. And everything you buy is going to help me to keep the Topher project going and bringing you interviews like this one. So let’s get back to Geoff Shaw.

[From video]

You you don’t Oh, it’s not to me. It’s it’s people in the country. It’s people in the outer suburban area. It’s the people in Pakenham, Nar Warren, these type of people down Geelong way, out the Bellarine Peninsula, uh up your way that are going to be affected. But it doesn’t affect us guys in the city which are predominantly Labour voters for the most part. So the the windfall gains tax came in and what just to explain what it is. If the government comes in and they rezone a area a new own property in that area. So let’s say it could be a farm with you know a few hectares or over two hectares anyway. That’s the anything over two hectares. So you own I don’t know 100 acres and they rezone it and all of a sudden it goes up because of that reasoning that one decision it goes up I don’t know a million dollars. Well, the government will come in and they’ll say, “Because of the decision we made, we just increased your wealth by a million dollars. You’ve got to pay us 50% of that $500,000 due payable now. Payable at the rezoning time.

However, you you can delay it and pay it off over you can pay it in 30 years time, but it’s going to be at the Victoria bond rate, 10-year bond rate, which is around about 5%. So, 30 years, you’re going to be paying the 10-year bond rate for 30 years compounded or you pay it up front or when you sell, but you still get the compounded interest. If you don’t pay straight away at the rezoning, you get that compounded interest. [End video]

Yeah. Yeah.

[From video]

And that’s how that that works. It’s incredible that this government is magnificent on uh on inventing new ways to tax us. [End video]

Yeah.

[From video] New ways to restrict us. [End video]

Can I make a comparison here? Because I had thought incorrectly clearly I had thought that this would operate in much the same way as existing capital gains taxes would. Uh i.e. I mean, if you think about it, if if the government makes a decision that increases the value of someone’s property, they get tax out of that anyway upon sale and in the form of that capital gains tax. But I assumed that you wouldn’t get taxed until you sold that property. You would have to make the decision to exit that property. But what this does is it means that someone who is, let’s say, a second, third generation farmer, let’s say down the Bellarine Peninsula, let’s say, yeah, they’ve got they’ve got a thousand acres or so, they’ve got a decent sized property down that way. They can go from being debt-free to being millions of dollars in debt with as you say interest a crewing at about 5% per annum just at the snap of a bureaucrat’s fingers. How come more people aren’t aware of of of this and the details about how this how just outrageous this actually is?

[From video]

It is outrageous. And I think I I did at the start I I mentioned that people are so tied up in their lives and taxes are coming all the time that they’re just going, “Oh, it doesn’t affect me. I ain’t own a house. I don’t own a farm. Um I’m not a developer or anything like that.” So until it hits their hip pocket, I’ve spoken to a lot of rental uh people who own rental properties that when the DAN tax came, I call it the Dan tax, which is the Covid debt tax, but it’s really the Dan tax. um they’re hitting they wanted to sell their properties because they can’t be doing paying this land tax and this dan tax and these regulations that you have to comply with because it’s not just taxes it’s regulations on the rental properties that people have to comply with that. [End video]

That’s to say nothing of the the new fire services levy that’s gone out as well it’s it’s I mean there’s just so much it it is so outrageous so just help me to understand because not everyone is you know you’ve got a tax background I look at this stuff all the time not everyone would fully have grasped the implications of it being payable immediately but deferable for 30 years with that interest a crewing. I’ve talked before about the fact that if you buy a house and you get a 5% loan paid off over 30 years, whatever your loan amount is, you will have essentially paid twice. Once in the loan principal and a second time in interest, it’s not quite exactly that much, but the interest will almost equate to the value of the property over that 30 years. And that’s assuming that you’re paying it off progressively, like a mortgage over those 30 years. So, let’s take that scenario. That would mean that a $1 million uplift in property value, if it was paid off over 30 years, like a mortgage, would have resulted in $1 million in tax and interest for the owner of that property. It essentially becomes a 100% tax.

[From video]

I’d say it’s more than that because it’s compounded, Topher. Compounded. If you took it to 30 years, it’s compound. It’s not just 5% a year. 5* 300. If you just did it basic. 5% over 30 years is 150. So, you’re paying 1.5 million on that million dollar uplift. But it’s compounded. Now, I haven’t done the figure. It’s easy to go into a interest compounding calculator and find out, but it’s going to be over $2 million if you did that over the 30 years. Now, you would hope that that property would have increased in value. But what if it didn’t? [End video]

And how outrageous that essentially now the government is going to tax the entirety of this supposed uplift in value that they’ve supposedly given you and then also be taxing the future inflation essentially. And I’ve talked on this show before about the fact that actually capital gains taxes are largely just taxes on inflation. I want to make one more point and get your thoughts on this, particularly as a former member of parliament. Um, isn’t it true to say that the reason why these properties weren’t already worth that much is because of government restrictions in the first place? The government is trying to argue and say, “We’re adding value to your property.” But isn’t it actually true that the government are simply no longer restricting the value of that property in the way that they had been?

[From video]

That’s right. They’ve put restrictions on it. So it limits what it’s the zoning limits what it’s worth. Yeah. So yeah, you’re correct. Their government policy limited it and now their government policy has put an uplift factor on it. Whenever the government gets involved, I know I’m not speaking to I know I’m speaking to someone who agrees with this. Whenever a government gets involved, there’s going to be strife. It’s not going to be good. [End video]

Well, it’s it’s honestly it’s starting to feel like an organized crime kind of protection racket. Like we’re going to be stand over men and stop you from fully exploiting the value of your property and then one day we’ll change our minds and we’ll let you actually exploit the full value of that property, but you’d better pay your your dues, which by the way, your dues are going to be even more than the increase in value. At at what point do we just call this organized crime?

[From video]

Well, I call tax legalized thievery anyway. It’s legal taxes legalized thievery. I’ve I’ve said that even when I was an accountant in my tax days. Um and more so I see it now during this government. You mentioned capital. I want to make it clear. Capital gains tax is a federal tax. So the federal guys get when you sell a property that that isn’t your primary place of residence. If you you’ve made uh a gain on it, if you bought it after 1985, which Hawke and Keating bought in, there’s a capital gain. That’s a federal tax. This is a state tax that wants their gain now too. It’s very much it’s very similar to this unrealized gains that they were going to do in superannuation at a federal level. Exactly. Exactly. That’s at a federal level. The state have taken and said this is what we’re going to do.[End video]

Okay. So, you’ve got me thinking even deeper now because with with capital gains tax, the the gain is calculated based on the depreciated acquiring value. So you you buy an investment property, you depreciate let’s say the kitchen and some of the other things inside that value and then once you sell it for an increased amount, the gain that the federal government taxes you on is the difference between the depreciated you know purchase price. I’m simplifying but between that price and the sale price essentially. Um do the government.

[From video]

And then and then half of that and then sorry half of that is taxed. So half of that you’ve got to you’ve got to declare and then that half of that’s taxed. [End video]

Okay. So, if a farm owner has their land revalued and let’s say they immediately choose to sell, they say, “You know what? Okay, I’m out of here.” Is the tax that they have, the windfall uh gains tax that they have to pay to the Victorian state government deductible against the capital gains tax they have to pay federally? Because if it isn’t, then if they sell, even if they sell immediately and they don’t incur any interest, are they not simply going to pay half of it to the Victorian government in windfall gains and the other half to the federal government in capital gains?

[From video]

Yeah, that’s correct. But um that’s correct your thinking if that was the case. But no, it’s it comes off the cost base of the property for capital gains tax feudally. [End video]

Okay. So that means that they’re only going to lose 75%. So they lose half of the of the gain in the windfall tax and then they lose half of the remainder for a total of 75%. In capital gains tax in capital gains tax

[From video]

In capital gains tax in capital gains tax it’ll be a bit less than that at the federal level would be probably half that. So they will lose at least around about the uh 65% area in federal and state. Yeah it is [End video]

And that’s if they don’t accrue any interest on the windfall gains. Uh, and that’s of course again ignoring the fact that it was the government that was actually withholding the value of that property in the first place. Geoff, you’ve been a member of parliament. You know that there are some good people in there. Uh there’s a lot of self-interested people in there as well. What do we do about this? This is madness. This we we quite literally cannot go on like this.

[From video]

Yeah, I agree. I mean, when I left uh parliament in 2014, the state had a debt of 22 billion. And one of the things I was going to do if I went back in was to push for no payroll tax, which brings which is about $7 billion a year. But payroll tax, what is payroll tax? I mean, you know, you’re taxing a it’s madness. That policy could have come true now because we’re coming up to $200 billion in debt. Nearly nine eight times more debt than we were 10 years ago, eight times more debt. Have we got eight times better road, eight times better bridges? No. [End video]

Eight times better public service. Eight times better policing in courts and criminal justice system. No, I don’t think so.

[From video]

No. No, we don’t. So that’s an enormous amount over. That’s eight times. So 22 billion to nearly 200 billion. The interest on that. If it was at the bond rate of 5%, we’re talking 10 billion a year. We could have wiped payroll tax, wiped a whole government department of payroll tax out and stopped putting pressure on small business and auditing them and and putting all these these pressures and regulations on them and that could have been just wiped. But we can’t do that now. It doesn’t seem this uh this government has a a real appetite for spending. It has no problem with the I’ve said it before. You might have even heard me say it before. It’s like a it’s like an excuse the wives here. It’s like a wife with a credit card and you just go out and you don’t it doesn’t matter. Someone will pay it. Oh yeah, it’ll be my husband or for those who the husband’s a spender. Let’s do it in reverse. But that’s what Jacinta Allan’s like. She’s she’s and Dan Andrews were like, they were like that. The spouse with a credit card go and spend. Who’s going to pay it? It’s us guys that pay it here in Victoria. And 27 out of those 60 odd taxes are on property. So it’s on property owners. And of course, you know that a lot of those expenses get transferred across to the consumer or the renter. [End video]

Yep. Absolutely they do. Of course they do. Nothing’s Nothing’s for free. Everything’s a trade-off. Yeah. There’s no such thing as taxing a property owner. You’re taxing individuals. Either the people that live in Well, generally you’re taxing the people that live in that property, whether they’re renting or whether they are owner occupiers. That’s where the tax will fall. The same is true for business. There’s no such thing as a tax on a business. You mentioned the payroll tax. you when you tax a business, you’re either taxing the owners and shareholders of that business who get reduced dividends or you’re taxing the customers of that business who get reduced uh who get increased prices or perhaps in some circumstances you might be taxing the employees who will miss out on on any pay rises or bonuses that they might have received. It always comes down to people. Every single one of these taxes, no matter how they get dressed up, is a tax on the people of Victoria. Well, Geoff, it’s not often that I learn something new, but today is one of those days. And that’s that’s courtesy of you. Thank you so much for coming on to the Topher project. Sorry, did you have one last comment there?

[From video]

No, no other comment, Topher, but uh you know, thanks for having me on and really it’s like I say, people just get caught up in their day-to-day lives and they don’t know about these things going on because until it affects them or until someone like you highlights uh what’s going on because in mainstream or the Labour Party will put a different spin on it. [End video]

Yeah, of course.

[From video] Than what what it actually is, which is a a massive tax grab. [End video]

Well, that’s why I do what I do and that’s why I’m so grateful to you for doing what you do and and helping me to learn things that I didn’t previously know. Geoff Shaw, friend of the show, friend of the Topher project, I thank you for coming on and uh educating me today.

[From video] Thank you, Topher. Thanks. Good to see you. [End video]

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