Page 4304 - Week 12 - Wednesday, 25 October 2017
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The second point I would like to make is also illustrated by the Charnwood example in Mr Barr’s amendment—that is, are we using the fairest, most equitable rating system? In the ACT we charge rates on the basis of the unimproved capital value of the land. This means that the worst and the best house in the street pay the same rates and, if relevant, land tax. In many cases that is clearly unfair. Why should someone, possibly an age pensioner, with a small house that they have not been able to maintain pay the same rates as someone with a house that is on the same street but is very likely three times as big and in much better condition? Arguably it would be much fairer to charge rates on the basis of improved capital value. Looking at the ALP amendment example, this would mean that both ratepayers pay the same because the capital value of their home is the same, so we would not have any need to have a separate system for units and houses.
In Victoria councils can charge rates on the basis of improved capital value, and many of them do so. In the past it would have been very challenging to do this, as of course it is harder to estimate the improved capital value than the unimproved capital value. However, it appears to me that the advent of satellite imagery and online house valuation services over recent years means that it should be a lot easier to work out the improved capital values that could be used as the basis of an improved rating system in the ACT. So I think that from an equity point of view basing rates on improved capital values is something that the ACT government should consider.
I will now look at concessions and deferments. The idea of moving from stamp duty to rates was something that was first floated in the Henry tax review and then, in the ACT context, was looked at in the Quinlan tax review. Both of them did this basically on the basis of economic efficiency. They paid very little attention to how the changes, which clearly would be beneficial for the average, would impact on disadvantaged families and individuals. The Quinlan review stated that the ACT government must:
Address the impacts on low income households from the substitution of the tax through the concessions system, with a possible expansion of the current rebate scheme.
The government has a system of concessions and rebates to address some of the inequities in rates. The most common rebate granted by the ACT government is the pensioner rebate scheme for rates, with 18,007 recipients receiving a total of $10,856,220 in the 2016-17 year. This rebate scheme was recently changed, with a grandfathered, uncapped scheme now being capped for new entrants to bring it closer to the most commonly used scheme. The change was done at the same time as expanding concessions on utilities so that low-income renters are better supported. This is a change that the Greens support. But it has had the impact, as the funds devoted to it were not expanded considerably, that some people are receiving a lower concession rebate.
This year many changes in rebates and concessions are happening at once, and also to the rating system with the changes to units. Some people this year are getting more assistance and some are getting less. In the background, rates are going up faster for some categories of properties—notably units—than others. So we are in a period of
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