Page 3877 - Week 10 - Thursday, 20 September 2018
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video
We also have the issue that at present in Canberra expensive houses often pay less than lower cost houses. The small, old house can be paying higher rates than a nearby knockdown rebuild, which could be worth up to $1 million more. As Mr Coe and Mrs Dunne have highlighted, less expensive units are often in our highest tax bracket because of the recent changes to how units are looked at. That is just not fair, and I totally agree with the PAC committee’s evaluation here.
Before and after putting out my paper on rates we did extensive consultation with stakeholders and, in particular, relevant industry groups, and it is clearly an issue. Almost all economists, including independent groups like the Grattan Institute and the Australia Institute, believe our economy would be better off if we phased out inefficient taxes like stamp duty and replaced them with broader taxes on property, like rates. And this is what we have been doing.
Since 2012 the ACT government has been phasing out inefficient taxes like stamp duty and insurance duty and increasing rates to make up the revenue needed to deliver government services. This has been successful so far, but we are the first part of Australia to do it and so we are the first part of Australia to uncover some of the significant difficulties with this major change.
We put out our discussion paper because we are concerned that these difficulties need to be fixed now. Unfairness is creeping into the system and it is not just for unit owners. The rating system has always been very clunky and had some anomalies. In the past they have largely been addressed by our deferral system and our concession system.
I am very pleased the age deferral system has been extended, I think partly as a result of Greens pressure. But regardless of why, it has been extended to potentially most aged rate payers in Canberra instead of only those living in the very expensive suburbs. There is also a system for rates rebates. But this has been capped at $700 a year for new entrants. As rates get up to being many thousands a year, it is simply not adequate, and it is only available to people who have healthcare cards from the commonwealth government.
We are concerned that a significant number of people who are not on really low incomes are finding keeping home ownership in Canberra very hard, particularly as they get older and have a fixed income. It is also a problem for younger people. Your first home is usually not one of the most expensive homes, but if you have an older house on a bigger block of land, you could be paying equal rates or potentially more than your next-door neighbour with a knockdown rebuild.
What can the ACT do about it? Of course, the ACT is not in a position to charge any tax based on a person’s income or wealth. The closest we can get to that is to base it on their wealth in terms of the real estate they own in the ACT. That, in fact, is our suggestion that we would like the Canberra community and the Assembly and the government to take seriously. We have been looking at what changes could be made to move from basing our rates on the value of land to the market value of the home. It would seem to us to be a lot fairer.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video