Page 73 - Week 01 - Tuesday, 12 February 2019
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These taxes are widely recognised as being unfair and inefficient and as hindering economic growth and activity. Conveyance duty can be a significant financial barrier, particularly for first homebuyers. It can also make it harder for families and older people to move to housing which best suits their needs during the life cycle. I am pleased to note that this reform has already resulted in significant benefits for Canberrans, despite being not quite halfway through the 20-year period.
Conveyance duty for eligible first homebuyers will be abolished from 1 July this year. Conveyance duty has also been significantly reduced for every other homebuyer as well. A family buying a property valued at $500,000 in the ACT today will save around eight and a half thousand dollars, compared to before the start of this reform in 2012.
These savings will continue to increase each year as the reform progresses, ending with the complete abolition of conveyance duty for all homebuyers. In addition, conveyance duty is no longer levied on commercial property transactions below $1.5 million. This can be a substantial help for a small business looking to establish or expand its presence. These are all significant benefits for our community. Tax reform is helping to deliver a fairer, more sustainable and more stable revenue base for providing high quality services each and every year to all Canberrans now and into the future.
The change in calculation methodology for units, the central issue in the public accounts committee inquiry, has improved the overall rates system by making it fairer and more equitable. It has done this by better aligning charges between houses and unit title properties such as apartments and townhouses. Under stage 1 of tax reform, from 2011-12 to 2016-17, increases in general rates were greater for houses than for units. The overall proportion of revenue raised from units was falling.
This disparity raised significant fairness and equity concerns, given that rates and land tax are used to fund the broadest range of services to the community, such as health, education, community, disability, justice and policing services. If the government had not made this change, the disparity between houses and units would have continued to increase over time, leading to even greater distortions in the future.
This difference between houses and units extended to land taxes as well, as these are calculated using the same methodology. These factors led to the government introducing a change in the methodology, which took effect from 1 July 2017. Previously the calculation was based on a land value attributed to each individual unit, which was often very low; it is now based on the total value of land, with the assessed rates then divided between units.
Even with this change, average rates continue to be much lower for units than for houses. The general rates charge for units in 2018-19 is around $1,470 on average, compared with $2,470 on average for houses—so a difference of around 40 per cent. Average general rates and land taxes will continue to be substantially lower for units into the future. In relation to the relativities between units and freestanding houses, we understand the concerns that members of the community have raised, including how
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