What’s with the scare story about rates tripling?

By 21 September, 2012 45

Does anyone know the facts about “rates tripling” as per the Liberal Party ads?

I can’t afford to pay $130 a WEEK for rates on the average wage!

What is Katie Gallagher thinking? And this will affect tenants surely?


UPDATE 21/09/12 12:30: Andrew Barr’s office have sent in this reply:

The Liberals are using an Abbott-style scare campaign about your rates.

Labor is not tripling rates. The Canberra Liberals are wrong.

ACT Labor has changed the rates system to make it fairer, and cut stamp duty to make housing more affordable.

For 33,700 Canberra households rates have gone down.

For others , the average rate increase is $2.35 a week as wages continue to rise and other taxes are cut.

The Seselja Liberals quote a table from the Quinlan tax review but that table was rejected by Government, and does not form part of the rates policy.

The Liberals are peddling a desperate lie, based on a rejected table to cover the fact they have no plan, except to cut jobs.


UPDATE 21/09/12 14:49: Zed Seselja’s office has sent in these thoughts:

Since budget day, Andrew Barr has been gloating about his ‘progressive’ changes to abolish stamp duty. Since Budget day, he has been saying it would be replaced by rates. Since budget day, he has not been honest about how just how much that is going to cost.

Andrew Barr himself said “Canberrans understand that tax changes like the ones I have announced need to be paid for.” ( Budget Speech June 2012)

The changes Andrew Barr proposes will cost the government well over $300 million a year when finished. That’s $300 million that needs to be replaced by rates. That is easily three times higher than the rates revenue generated now. It is simply impossible to abolish one tax and not increase rates by the same amount, without a drastic change to the budget or a massive job cuts to the ACT public service.

After months taking the credit as ‘the great reformer’ for abolishing stamp duty, It is too late for him to run away from the costs of those promises now.

As far as ‘fairness’ goes – How is it fair to those on a fixed income to increase their rates by thousands every year? How is it fair to those who have just paid stamp duty to pay the same amount again every few years – forever?
And how is it fair to those who simply cannot pay, who will then have their debt deducted from their estate, just like a death tax?

It is not a ‘fairer’ tax, it is not a ‘progressive’ tax – it is a bigger tax, plain and simple.

The Canberra Liberals plan is to give support to those who most need it – first home buyers, without tripling rates for everyone else.

It is a choice – people can vote to abolish stamp duty and have their rates tripled to pay for it, or they can vote for the existing scheme, plus support for first home buyers, and keep their rates low.

One thing is guaranteed, rates will not triple under the Canberra Liberals to pay for Andrew Barr’s promises.

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45 Responses to What’s with the scare story about rates tripling?
#1
davo10112:20 pm, 21 Sep 12

Table 45 on p.148 of the ACT taxation review. Although these figures are for a transition over 10 years and I think the current intention is to do it over 20 years.

#2
johnboy12:31 pm, 21 Sep 12

Now with a response from Andrew Barr’s office.

#3
stillflying1:01 pm, 21 Sep 12

So we’ve heard the labor rebuttal. Any clarification from the liberals on what they were referring to?

Then we can take the labor response and liberal clarification, combine them together, remove the trash talking from both sides and get something closer to the truth.

#4
bd841:19 pm, 21 Sep 12

So, for a minority rates will decrease, everyone else will be at least $122 a year out of pocket, probably increasing on an annual basis as more taxes are abolished. I believe the argument by the Liberals is that everyone in Canberra will pay for the removal of taxes that are only paid by a small part of the community or on a rare occasion when the buy or sell something.

I think the government are trying to hide the full cost to the public and how much we will need to pay for it, but I also think the liberals are exaggerating with the tripling of rates. But then this is an election and you will get that from all parties as that’s what people pay attention to.

#5
Truthiness1:23 pm, 21 Sep 12

Tripling over twenty years is the same as a yearly increase of 5.75% compounded annually. Over ten years it is more like 11.5%, which is still only slightly more than landlords can legally increase a tenant’s rent each year.

#6
Mothy1:30 pm, 21 Sep 12

I keep thinking about this article each time I hear that “triple your rates” claim.

And wondering where the land to develop (and people to populate it) is going to come from if the Libs expect to be able to rely on stamp duty ad infinitum going forward.

Or I imagine an Abbott Govt federally, subsequent public service cuts, the resulting population decline for Canberra, and the resulting impact on the local housing market – and what does that do to ongoing stamp duty revenues?

#7
Mysteryman1:30 pm, 21 Sep 12

The PDF that davo101 posted shows an average of $1056 to $2932 in 10 years.

#8
Doc Dogg1:38 pm, 21 Sep 12

We could always just get the ACT Government (of whatever flavour) to spend less money on things we don’t need so that they don’t require as much money from the rates payers.

Don’t laugh, it could happen…

#9
Very Busy1:51 pm, 21 Sep 12

My average annual rates bill has doubled, with an average annual increase of 6.5% since ACT Labor came to office. That is more than double the rate of CPI increases.

Huge increases in 2004 and 2005 of 18% and 21% respectively would be partly to blame. Going by ACT Labor’s track record, I wouldn’t be at all surprised if Labor threw in a couple more “one off” massive increases as they have done in the past.

#10
arescarti421:52 pm, 21 Sep 12

Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility. Replacing it with increased rates (e.g. higher land taxes) is a brilliant idea that every state should be doing.

#11
Very Busy1:53 pm, 21 Sep 12

Doc Dogg said :

We could always just get the ACT Government (of whatever flavour) to spend less money on things we don’t need so that they don’t require as much money from the rates payers.

Don’t laugh, it could happen…

Yeh, like GDE version 1.

#12
Grrrr2:34 pm, 21 Sep 12

Well, I’m getting screwed over. Firstly, my current house falls close to the Median ACT house price value .. but according to table 45 in the ACT Taxation review, I’m well in the top quintile for rates.

I have just purchased a new house, and handed the government quite a large pile of stamp duty. The AUV made up like 60% of the purchase price, and rates are even higher. According to the tax review, within 10 years I WILL be paying 3.5 times the current rates. Even adjusted for 3% inflation yearly it’s still 2.5 times the current rates.

The end result: Once the transition is complete, every 7 years they will extract from me extra rates above the current level equivalent to the stamp duty I have just paid. (I don’t plan to move every 7 years.)

Within a decade I will have paid one year’s worth of wages in stamp duty + rates. Not happy.

#13
Kramer2:46 pm, 21 Sep 12

Masquara – another stab at Labor? Don’t you need to back announce Liberal Party propaganda with “written and authorised by ….”???
Anyone with half a brain could identitfy the pathetic fear campaign attempt in this ad a mile away.

#14
Mysteryman2:55 pm, 21 Sep 12

Kramer said :

Masquara – another stab at Labor? Don’t you need to back announce Liberal Party propaganda with “written and authorised by ….”???
Anyone with half a brain could identitfy the pathetic fear campaign attempt in this ad a mile away.

It sounds like you have half a brain. Care to explain the table on p. 148 of the link posted in the first response?

#15
54-112:55 pm, 21 Sep 12

Kramer said :

Masquara – another stab at Labor? Don’t you need to back announce Liberal Party propaganda with “written and authorised by ….”???
Anyone with half a brain could identitfy the pathetic fear campaign attempt in this ad a mile away.

If Masquara had another brain, it’d be lonely.

#16
chewy143:11 pm, 21 Sep 12

I don’t know why Labor are beating around the bush.

This policy is a great one, they should own it and be proud.

arescarti42 said :

Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility. Replacing it with increased rates (e.g. higher land taxes) is a brilliant idea that every state should be doing.

+1.

#17
c_c3:16 pm, 21 Sep 12

Unfortunately you give the typical voter, swayed easily by three word sloganeering too much credit.

“Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility.”

vs

“TRIPPLE YOUR TAXES”
[Spoken in a menacing voice like you just ate a bar of Solvol]

#18
c_c3:17 pm, 21 Sep 12

Unfortunately you give the typical voter, swayed easily by three word sloganeering too much credit.

“Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility.”

vs

“TRIPPLE YOUR TAXES”
[Spoken in a menacing voice like narrator just ate a bar of Solvol]

#19
mezza763:19 pm, 21 Sep 12

chewy14 said :

I don’t know why Labor are beating around the bush.

This policy is a great one, they should own it and be proud.

arescarti42 said :

Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility. Replacing it with increased rates (e.g. higher land taxes) is a brilliant idea that every state should be doing.

+1.

+1 gazillion. Plenty of people whinge about politics being short-termism (see BCA), but few have the courage to put it action. If sub-national governments are going to break free from the disaster of property boom & busts, this is the sort of politcy that is going to do it.

#20
Chop713:23 pm, 21 Sep 12

Mysteryman said :

The PDF that davo101 posted shows an average of $1056 to $2932 in 10 years.

So over 10 years Zed is probably right with his triple rates call.

If it was over 20 years, we maybe could handle it and get rid of stamp duty. That would be something Labor could easily sell. So which is it, 10 years or 20 years?

#21
Gungahlin Al3:25 pm, 21 Sep 12

This Liberal spin will be hung in a frame alongside that other Liberal masterpiece: “Whyalla will be wiped off the map.”

davo101 said :

Table 45 on p.148 of the ACT taxation review. Although these figures are for a transition over 10 years and I think the current intention is to do it over 20 years.

This model was rejected.

arescarti42 said :

Stamp Duty is a horribly inefficient, unfair and ridiculously antiquated tax that acts as a major impediment to labour mobility. Replacing it with increased rates (e.g. higher land taxes) is a brilliant idea that every state should be doing.

Indeed. It prevents people downsizing as they age. They stick instead with trying to maintain oversized yards while families are forced further out where there are no yards for their children. It inhibits people relocating to live closer to work. It inhibits property investments and better rental availability.

If some people are caught with limited means but on a property with unrealised high value, there could be a request for a means assessment. We (Maroochy Shire Council) did similar to this on the Sunshine Coast when waterfront property took off in places like Peregian Beach. People who bought in when streets were dirt found themselves on $1M land with no ability to pay the high rates. The solutions to this are already out there in wide use around Australian local governments. This is as I explained to the Inner South Combined Community Council meet the candidates forum last week.

Meanwhile, the Liberals are again hanging their hats on promises like stamp duty waivers for new home buyers – which time and again has proven to just drive up home prices by the same amount.

#22
JessP3:43 pm, 21 Sep 12

Very Busy said :

My average annual rates bill has doubled, with an average annual increase of 6.5% since ACT Labor came to office. That is more than double the rate of CPI increases.

Huge increases in 2004 and 2005 of 18% and 21% respectively would be partly to blame. Going by ACT Labor’s track record, I wouldn’t be at all surprised if Labor threw in a couple more “one off” massive increases as they have done in the past.

+1
A huge rate increase this year and doubled over the last few years – and with all the election promises and no stamp duty where are the dollars coming from?

Gungahlin Al said :

Indeed. It prevents people downsizing as they age. They stick instead with trying to maintain oversized yards while families are forced further out where there are no yards for their children. It inhibits people relocating to live closer to work. It inhibits property investments and better rental availability.

Under this plan people with have to downsize because they wont be able to afford to pay there rates and if they choose to defer it they will leave a debt for after their estates.

This from the government that promised us Gungalin Drive extension as a via transport option – and delivered a 2 lane road and 5 years of construction pain?

What about the data scandal?? What does that say about the ACT Government?

For the last 11 years I had faith in ACT Labor to do the right thing, but no more.

#23
Tetranitrate4:09 pm, 21 Sep 12

The position the libs have taken on this is so juvenile and short sighted that despite having formed the opinion that the present government must go, I’m seriously thinking of putting Labor/Greens ahead of Libs after 3rd parties.
Why can’t the libs come out swinging on the broken planning and liquor licence systems?

#24
ps01044:32 pm, 21 Sep 12

Tetranitrate said :

The position the libs have taken on this is so juvenile and short sighted that despite having formed the opinion that the present government must go, I’m seriously thinking of putting Labor/Greens ahead of Libs after 3rd parties.

Agreed. I don’t normally support Labor, but I am absoloutely disgusted at the way the Libs have approached this issue. Short term sensationalist scare campaign. Seriously, grow up and treat the electorate with at least a little bit of intelligence. You can remove me from your ‘safe lib vote’ column and put me firmly in the ‘undecided swinger’ (of the voter kind…not any other kind).

#25
JC5:01 pm, 21 Sep 12

Tetranitrate said :

The position the libs have taken on this is so juvenile and short sighted that despite having formed the opinion that the present government must go, I’m seriously thinking of putting Labor/Greens ahead of Libs after 3rd parties.
Why can’t the libs come out swinging on the broken planning and liquor licence systems?

Out of curiosity what is wrong with the current liquor licence system?

#26
housebound5:06 pm, 21 Sep 12

Barr would have had some credibility on this issue if he had gone for a phased approach, but no, he had to go for the double hit on those of us who have already paid stamp duty. Stamp duty might be ‘inefficient’, but you only pay it if you move – far batter than the rate increases we’ve all had.

Looking back through old rates notices, the amount we paid back in 2002 (just after Labor took over) was less than the basic flat fee we now pay before taking ULP into account. The increase from then to now is a bit over 2.5 times, and that’s with stamp duty in place.

#27
Skidbladnir5:12 pm, 21 Sep 12

As much as I hate the Labor Party, the ACT Liberal Party are a joke of an opposition and are profoundly ineffective as a whole.

They have a few members who seem like they could actually lead a Party to election victory and might otherwise be judged as worthwhile voting material, if they weren’t clearly so dain bramaged as to follow incompetent leaders to their doom.

Also, Page 16 of the relevant Budget Paper shows the effective benefit of different methods of taxation. Payroll Tax has in excess of 30% wastage in admin overhead, Conveyance and Insurance duties are worse. Putting as much of the burden on general rates makes for a more administratively efficient taxation model.
IE: More bang per buck.

(Does the Liberal Party actually bother to read any paperwork that the ACT Public Service gives them, especially if its relevant to the strength of whatever attack campaign they’re planning?)

#28
cranky5:23 pm, 21 Sep 12

Govco would be seen in a far better light if, rather than reducing stamp duty, they made land available at a reduced price in the order of $20k per block, balancing the equation for new home buyers.

#29
rosscoact5:45 pm, 21 Sep 12

cranky said :

Govco would be seen in a far better light if, rather than reducing stamp duty, they made land available at a reduced price in the order of $20k per block, balancing the equation for new home buyers.

It costs say $50k per block to service, let alone the cost of the land. This would mean a massive subsidy to the people who buy blocks of land so that what is now a revenue stream turns into a massive nett cost to all taxpayers.

Hmmm, not sure if you have thought this through.

#30
cranky6:00 pm, 21 Sep 12

Sorry, probably not well written.

Instead of the $250K or so per block the Gov require, make it $230K. Bulk profit from the land, servicing covered.

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