Page 2660 - Week 08 - Thursday, 14 August 2014
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not know where this one is going but I think this government continues to want to squeeze revenue from every asset in this community that it can find. It will end eventually. The Canberra community will not be able to bear it for much longer.
MR BARR (Molonglo—Deputy Chief Minister, Treasurer, Minister for Economic Development, Minister for Housing and Minister for Tourism and Events) (8.37), in reply: The government announced in the budget that it would be amending the Land Tax Act 2004 to provide greater equality in the distribution of land tax and this bill provides for a fairer land tax system in the ACT.
Land tax is imposed on any residential property that is rented and residential properties owned by a corporation or a trustee. It is an important source of revenue to the territory. It is timely to review the structure of how the tax is applied, especially in light of population and housing density changes in recent years.
The Land Tax Amendment Bill 2014 resolves an issue of inequity that exists in the application of land tax. Before 1 July 2014 a determined marginal rate, in conjunction with the property’s average unimproved value, was used to calculate the taxation liability. As most members are aware, multi-unit dwellings and townhouses generally do have lower average unimproved values resulting in the application of a lower marginal rate.
Consequently, a unit that has equal or, in fact, greater market value compared with a residential house is paying substantially less land tax. Owners of standard residential properties comprise 45 per cent of the land tax base but are contributing 78 per cent of the land tax revenue. Multi-unit dwellings and townhouses, many of them rented for amounts significantly more than houses, accounted for the remaining 55 per cent of properties liable for land tax. However, this majority of properties only contributed 22 per cent of the land tax revenue.
Without these amendments, not only would there continue to be an inequity where properties rented at similar value, or sometimes even higher value, would attract a lower tax, but also as diversification of our housing stock continued, the land tax base would be eroded over time.
This bill aims to address this issue and introduces a fixed charge component to the calculation of land tax for all liable properties. This provides a more even and equitable distribution of land tax across the ACT. The fixed charge is $900 per property. The fixed charge component contributes 40 per cent of land tax revenue. This has synergies with the framework for general rates, where 40 per cent of revenue is derived from the fixed charge.
As those opposite have neglected to mention in their commentary, as a result of the fixed charge the marginal rates associated with land tax have been significantly reduced, ensuring the more equitable—
Mr Wall interjecting—
MADAM DEPUTY SPEAKER: Mr Wall!
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