Keeping Rates Fair
We must ensure that the tax system is as fair and equitable as possible, for young people entering the market, older Canberrans on lower incomes, and the more vulnerable in our community.
The Greens – both nationally and in the ACT – have a long-term commitment to governments having sufficient revenue to fund a high standard of community services. The ACT Greens have also supported the Government’s tax reform program consistently since the Quinlan Review in 2012.
The ACT Greens support the tax reform move from stamp duty to rates, but we need to keep the rates system fair while tax reform continues over the next 10 to 20 years.
Rates are currently based on land value, not market value, so the value of the buildings and gardens are not included. It means that the least expensive house on a street will typically pay the same (or possibly even more) rates as the most expensive house.
Because we are the first jurisdiction in Australia to deliver this tax reform, we are also the first to observe some of the downsides.
What are the Greens doing to keep rates fair?
The Greens are working hard to ensure that rates are fair and equitable.
In September 2017, the Greens worked to commit the Government to conduct financial and social impact analysis on how recent tax and rates concession policy changes may affect Canberrans on low- and fixed-incomes. This has so far produced some initial analysis from Government, however we believe there is more work to be done to keep rates fair.
To achieve this, the Greens would like to see the review include:
- A comprehensive financial and social impact analysis to ensure fairness for people, reflecting their ability to pay
- An investigation of moving the rates system to Capital Improved Value: The ACT Greens last year released a discussion paper outlining a proposal to shift residential rates to a Capital Improved Value system to assess how future rates reform might also be adjusted accordingly. The Greens have put this option forward as it would likely better match taxation to ability to pay. The ACT has previously had an Improved Value system, as this was the exact basis of stamp duty. A purely land value based system effectively benefits McMansions over first home buyers and seniors with a small house in an older suburb.
- An investigation of the impact of residential land tax, given Recommendation 18 of the 2012 Quinlan review was to over time abolish it. Many economists, such as Ken Henry, believe that land tax ultimately partly flows through to rents which could have substantial negative impacts on low-income Canberrans.
In November 2018, Caroline Le Couteur saw a rates motion passed in the Assembly that will make rates fairer by:
- Ensuring that residential rate payers who receive concessions are advised of available deferment programs;
- Redesigning rates notices and better communicate the concessions, deferrals and hardship arrangements that can support residential rates payers;
- Provide additional training for Revenue Office staff to better identify and support those experiencing financial hardship.
We’ll keep working to ensure that tax reform in the ACT is as fair and equitable as possible.
First home buyers
“Australia is facing a housing crisis. At the federal level, the major parties have set the rules so that buying a home or having decent rights when you rent is harder than ever.
“For first home buyers in Canberra, our proposal would tax people with less expensive houses less that people with more expensive houses—a fairer tax outcome for young people entering the housing market for the first time.
Government analysis shows that while for most Canberrans rates were below 2% of their income, some people, such as a single aged pensioner in an average house in Garran, are paying 14% of their income in rates alone. This will increase rapidly while tax reform continues, which is not sustainable.
There are concessions and deferments that go some way towards fairness. However, it is hard to make the system fair when small, old houses can be paying the same or more as a large house down the street worth $500,000 more.
Taking care of the vulnerable in our community: Rates and Deferment Schemes
Some rates deferment schemes, especially the Aged Deferment Scheme, are barely utilised, and remain inequitable and inaccessible. The Greens believe the Government needs to do more promote these programs to low-income households.
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