Page 1089 - Week 05 - Tuesday, 23 June 1992
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The current forward estimates are based on an assumption of maintenance of the average rate payable in 1992-93 in real terms compared with 1991-92. Whilst higher growth is now expected to increase rates revenue by about $1m more than assumed at the time of compiling the forward estimates, maintaining rates in real terms would make no other contribution to reducing the 1992-93 budget gap. Municipal rates, Madam Speaker, are one of the few broadly based taxes available to the ACT. Additional rating effort can avoid the need for reliance on other taxes, particularly those which act as a disincentive to employment. Accordingly, the Government is proposing that a real increase in rating effort of 2 per cent is needed and is appropriate. This will result in an average increase in rates payable of 5 per cent. The new rate we are proposing is 1.019c in the dollar. This will mean that the rates bill for the average private residential property will increase by $73. However, individual ratepayers can expect their rates to rise or fall in line with the movement in individual property valuations. The rate for rural properties will continue to be set at half the general rate.
The rating system is based on the principle that the distribution of the rate burden should be determined in accordance with independently assessed land values. The reduced valuations in the commercial sector will mean that many businesses will receive some relief in this year's rates bill. The Government is proposing no change in the rate of land tax, currently set at one cent in the dollar. Whilst the land tax will impact on income earning residential properties, this reflects the rapidly increasing capital values in that sector.
Madam Speaker, turning to the details of the Bill before the Assembly, the Rates and Land Tax Act provides for the imposition of municipal rates and land tax in the ACT. The Act is being amended to change the rating factors used to calculate general rates as a consequence of the new valuations. The general rate will be set at 1.019c in the dollar. Rates on rural land outside the city area which is permanently used for primary production will be 0.5095c in the dollar, that is, half of the general rate. As I said, the land tax rate remains unchanged.
The Act is also being amended to clarify the legal obligation to pay full rates and land tax on rural leases within the city area that are being used for purposes other than primary production, for example, retail nurseries. This amendment will not result in any property being categorised differently in 1992-93 in respect of rates and land tax than was the case this year. It will, however, continue to ensure that some businesses do not have an unfair advantage over similar businesses operating from commercial leases elsewhere in the ACT. This amendment will not alter the liability of genuine primary producers holding rural leases within the city area. Such properties will continue to pay rural rates by a determination under section 28 of the Act. In addition to the changes set out in the Bill, the Government will be reducing the discount currently provided for early payment of rates from 5 per cent to 4 per cent, reflecting the general reduction in interest rates. In the present climate of lower interest rates, this is an attractive concession.
Madam Speaker, before I present the explanatory memorandum for this Bill I would like to advise the Assembly that the Government is today announcing a number of other taxation measures. Tobacco tax is to rise, in line with New South Wales, from 50 per cent to 75 per cent of the wholesale value of sales. The new rates will take effect from the licensing period commencing on 1 September 1992 and will begin to reflect in prices of tobacco products from 1 July. The increase in
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