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Household rates rise slowly, unit owners will cop catch-up costs

Household rates rise slowly, unit owners will cop catch-up costs

30 June 2016 Markus Mannheim

Household rates will continue to rise in the election year but far more gradually than in previous years.

But the reprieve will be temporary: increases will be higher in following years, especially for unit owners.

Canberra property owners will receive a bill in August that is, on average, 4.5 per cent higher than last year's bill – a dramatically smaller increase than the average 9 per cent rise of the past four years.

Next year, rates bills will increase by about 7 per cent.

However, annual rates for units are likely to rise by about 20 per cent in 2017, and 15 per cent the following year, as a result of changes to the way the government calculates the land value for apartments.

Chief Minister Andrew Barr said the new method would address "anomalies in the system", which had allowed unit owners to pay rates that didn't reflect their property's market and rental value.

The next annual rates bill will be $2152 for a house, on average, and $1156 for a unit.

Suburbs in the inner north and south will bear a heavier burden over the coming year, reflecting their faster-growing property values.

The increase will be sharpest in Campbell, where the average bill will be $3271, up 7.4 per cent from last year.

Meanwhile, home owners in Lyons can expect a lower rates bill: its average of $1861 will be 2.2 per cent less than last year.

Tuesday's budget recommitted the Barr government to moving away from so-called "inefficient" fees that relatively few people pay – such as stamp duty and payroll tax – in favour of land taxes, so as to share the burden more evenly.

Most economists recommend the changes as fairer to ratepayers and more stable for governments, however the ACT remains the only Australian jurisdiction that has changed its tax base in this way.

Tuesday's budget included new data showing how rates had increased over the past five years, and compared them with what would have happened without Labor's tax policy.

The average Canberra household's annual rates bill has increased by $624, or 31 per cent, since 2011-12. The government says it would have risen by $172 (14 per cent) in any event, but without the benefits from abolishing or cutting taxes on insurance, wages, commercial landlords and other activities.

"We began a long-term process of transition of the ACT's revenue base away from inefficient taxes towards more efficient taxes," Mr Barr said.

"We've made that transition towards a simpler, fairer and less economically distorting, broad-based, land tax."



Date: June 8, 2016