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Andrew Barr offers home owners rates breather in election year

Andrew Barr offers home owners rates breather in election year

30 June 2016 Kristen Lawson

Chief Minister Andrew Barr has delivered an election-year rates breather to home owners in Tuesday's budget, but there is a sting in the tail for owners of units.

Rates will rise an average 4.5 per cent from July, a significant let-up on the 9 and 10 per cent rises of recent years. Rates rises resume an annual 7 per cent increase each year from 2017-18.

But owners of units will be hit with a 20 per cent average increase in rates in 2017-18 and more still in the following year, after Mr Barr unveiled his new five-year tax plan. 

All home owners will pay a "safer families levy" of $30 a household this year on their rates bills, used for domestic violence measures.

Among other levies and taxes on the way up, land tax increases $100 for investment properties, parking fees increase 6 per cent as foreshadowed last year, driver's licence fees increase 5 per cent, and the fire and emergency services levy is up $20.

If you turn 60 after July 2017, you will have to wait an extra year to get a senior's card, which gives you a range of discounts, and the age will be increased to 65 over a decade.

If you pay your rates at the beginning of the year, instead of getting a 3 per cent discount, the discount will be 2 per cent.

It is a budget awash with money, with the Territory's revenue topping $5 billion for the first time, largely on the back of much higher than expected GST revenue from the Commonwealth, up $51 million in 2016-17, and more money from land sales.

Government tax revenue is also up on expectations, especially in payroll tax and stamp duty on property sales.

It adds up to a much-improved budget bottom line, with this year's deficit almost halved, to $232 million. The 2016-17 deficit is forecast at $182 million, a result Mr Barr said would have been much better still, at less than $100 million, if not for a new way of accounting for the government's superannuation liability.

Five years ago, Labor began to phase out stamp duty over 20 years and increase rates to make up the lost income. But after a series of 10 per cent rates hikes year on year and with a tough election in four months' time, Mr Barr has scaled back, halving the increase this year, and slowing the switch from stamp duty to rates.

But Mr Barr said his commitment to the tax shift was unchanged.

"There was some feverish speculation that the government was losing its mojo on tax reform, let me assure you we haven't," he said.

This year's cuts to stamp duty take effect immediately, and will mean someone buying a $500,000 house will from Wednesday pay about $13,500 in stamp duty to the government, $1100 less than the same buyer would have paid a day earlier. Over the coming five years, the amount will continue to fall modestly, to $10,000 in 2021-22.

A buyer of a $1 million house pays $42,200 in stamp duty from Wednesday and $33,500 in stamp duty in five years.

There is better news for people buying commercial property worth less than $1.5 million, whose stamp duty will be halved in 2017-18 and abolished altogether a year later.

The rosy financial position has allowed Mr Barr to splash on spending, with health a big winner. Roads also receive substantial funding, with more than $100 million to widen key roads. Buses get $17 million more, including a free city bus.

Mr Barr foreshadowed a modest surplus in 2018-19 of $33 million and a stronger $66 million surplus in 2019-20. That surplus coincided with the first of the annual "availability payments" to the tram consortium, Mr Barr said, dismissing concerns about affordability.

"We will be in a strong surplus position having paid for light rail," he said.

"All of that rubbish that has been put forward by the Opposition about the affordability of this project is completely destroyed by this budget."

Mr Barr said the government would take a commitment to stage two of the tram to the October election.

It is a budget without a big-picture spend, with the government's key glitter project, City to the Lake, largely on hold. 

Debt peaks at $2.9 billion in 2018-19, which is lower than the expected $3.1 billion in 2017-18.

 

Source: Canberratimes.com.au

Date: June 7, 2016