Investing – the trash talk with Landfill levy
On February, the State of Victoria rolled out a new program, Recycling Victoria. Among many information about what we will tackle the rubbish and recyclable materials, there is an item that could affect us as real estate investors.
Tl; dr;
- Landfill levy is increasing from $65.90 to $125.90 per tonne in 2023.
- Eventually it will be passed down to council rates, i.e. the rates will be higher.
What is landfill levy?
Landfill levy, or waste levy, is a tax applied to waste types by weight. The government designed it to incentivise waste generators to reduce general waste, and increase diversion through recycling. Governments also use landfill levies to fund environmental and sustainability programs to improve waste management.
In a simpler term, it is the tax that home owners pay to get rid of their trash, for the trucks to roll in every week and take the rubbish away and process it. As a result, this levy often mixes into the council rates that we pay every quarter.
How much is it increasing?
According to Victorian Landfill guidance, the rates are increasing year by year, and stop at 2023. In details, they are increasing from $65.90 to $125.90 per trash tonne.
The levy for FY 2019-2020 stays the same at around $65.90 per tonne.
This increment will put into Sustainability Fund, which funds sustainable projects and improve the waste management system.
The government hopes to reduce landfill amount by increasing the levy. People will be more inclined to use recyclable products. This implies that the increased amount will pass down to rates payers, i.e. home owners and investors. Expecting your rates to increase by a small amount in the next 3 years is not unreasonable.
Summary
It is good to know the government cares about the environment and has some initiative to promote sustainability environment. However with the increment of rates in mind, we need to be a bit more careful on how we as property investors calculate our numbers.
By Tuan Nguyen
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