Rates will go up 7 per cent in 2019-20 as part of the Government’s ongoing 20-year tax reform program.
The Canberra Liberals’ pledge to freeze rates for the four years of its first term in office if elected at next year’s election for the Legislative Assembly has drawn a withering attack from a Government that recognises the popular appeal of a pause in its 20-year tax reform program.
Opposition Leader Alistair Coe told the Assembly in his ACT Budget reply speech that a Liberal government would end Labor’s rates rip-off and bring relief to ordinary Canberrans who were hurting.
He said a freeze would ‘take the pressure off households, give certainty and end Labor’s punitive rates regime’.
Anticipating the Labor response that this would be irresponsible, Mr Coe said pressing on with the tax reform process was reckless and unethical, despite Chief Minister Andrew Barr saying the heavy lifting was over and the rate of rises to come would slow.
Setting the scene for an election battle over tax and spending, Mr Barr said in a statement that the Liberals’ alternative Budget would be a cocktail of service cuts, job losses and tax increases.
The two leaders traded blows over how much rates have increased with Mr Coe saying rate revenue had doubled and was set to triple, while Mr Barr countered with average rates figures denying this.
“In 2016, the Labor-Greens Government doubled its rates revenue to $423 million, up from $209 million in 2012. In 2021, rates will more than triple to $652 million and keep growing the year after to $698 million,” Mr Coe said.
“The Government is doing this at a time when its total revenue will soon pass a record-breaking $7 billion.”
Mr Barr said that in 2012-13 average household rates were $1426 a year and in 2019-20 they would be $2373. “Household rates have not tripled, and will not triple under the ACT’s tax reform program,” he said.
It may be a case of comparing apples and oranges, but there is no doubt the rates issue is biting.
The Ratepayers Association of the ACT welcomed the rates freeze pledge, saying large rates increases every year for almost a decade had been a dishonest revenue raising ploy by the Government.
“The massive increases in rates have not seen equally large dollar reductions in total stamp duties receipts,” it said. “It’s good to see more first home buyers benefiting from stamp duty abolition. However most states have already been doing the same without offsetting increases in rates.
“Home owners and tenants are paying the added rates and land tax costs which are making life very difficult to unbearable and impossible. Rates payments have become the equivalent to a second mortgage which can never be paid off whilst payments increase dramatically every year.”
But Mr Barr said stamp duty rates had been cut every year since 2012-13 and continued to fall in every year of the current ACT Budget.
“The buyer of a $500,000 home now pays $9100 less in stamp duty than when tax reform commenced. They also save $10,570 compared with the stamp duty payable in Victoria or $6590 compared with New South Wales.”
Mr Barr also attacked the Liberals’ 2018 pledge to axe the lucrative payroll tax which he said would cost the Budget more than $600 million a year from 2020.
“His plans would mean cutting the equivalent to one-third of the ACT’s total spend on health every single year,” he said.
“Over 90 per cent of ACT businesses pay no payroll tax at all. Mr Coe’s plan would mean cutting essential services for Canberrans in order to give a massive tax cut to multinationals and big national companies like supermarkets, banks and utilities.”
Mr Barr said Government help for those on low or fixed income would amount in 2019-20 to $76.5 million worth of direct assistance to households through concessions, including on general rates, transport and utilities costs.
”Mr Coe has also shown yet again that he is willing to blatantly lie when the facts don’t fit with his constant negativity about Canberra’s economy and tax reform,” he said.
He rammed home the point that the Liberals were planning huge cuts to services.
“When will you tell Canberrans what’s on the chopping block, Mr Coe? Are you ruling out increasing any other tax or charge? Will you reverse stamp duty cuts, or reintroduce insurance taxes?” he said.
But Mr Coe won’t be drawn on cuts, his focus will remain on rate rises, the cost of living and what the Liberals will argue is wasteful Government spending.
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