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A pox on both their houses as rates bite

By Hank Spier - 4 October 2016 38

Homes

Rates are too high in the ACT. But at last the government is calling this tax what it is: Land Value Tax.

Governments of all persuasions have turned thief. They extort rates to pay not only for municipal services but anything else that takes their fancy and I use that word deliberately. The word as defined by the Oxford dictionary ”to get money from persons with force, threats or importunity”. The ACT Government’s threat is a hefty fine if you don’t pay up.

Over the past three years all ratepayers have seen huge increases in the region of thirty percent with no relief in sight. Chief Minister Andrew Barr lamented that he could only increase rates 7% this year because it is an election year. This begs the question, how much would he have increased them if it wasn’t? One can only speculate that it would have been his usual 10%.

Canberra’s ludicrously high rates are much higher than Sydney. Rates paid in Campbell on a small block are higher than rates on Sydney Harbour.

Rates have gone from 18% of revenue to 27% of revenue in the past five years. This is approaching a third of all revenue raised in Canberra and is the highest source of revenue collected from Canberrans.  And not everyone pays rates. This means the crippling burden falls on the same select group of people year after year.

Governments are addicted to rates and their greed knows no bounds. Unlimited rate increases cause hardship and lack of certainty particularly to the elderly on fixed incomes. These extortionate rates are forcing some Canberrans out of their homes or going without heating in winter.

This rot must stop. Rates must be frozen for the next 2 years. After that they must be capped in line with CPI as they are in NSW. The capping of rates must be enshrined in law so as to prevent governments reverting to their greedy old ways. Governments must be accountable. This free for all must stop and ratepayers given a break from legalised theft.

Ratepayers are sitting ducks. Not only do we pay more than our fair share of running the Territory, we are easy targets for new taxes or levies that are attached to our rates bills. We now have 2, the emergency services levy and the newest levy the levy for domestic violence. These are both important things but why just ratepayers paying, why not everyone in Canberra? It would be much fairer and easier to put these levies onto electricity bills.

Older ratepayers in inner Canberra have lost the most ground in recent years. They have suffered three major hits. First the value in their properties has risen, second the rate in the dollar has been increased and third people on the Old Age Pension’s rebate had been cut from 50% of the bill to a maximum of $780. If you take an average property in Campbell the rates are $4000, under the old scheme a pensioner would have been rebated $2000 now it’s $780.

When it comes to extortionate rate increases there is no difference between Liberal, Labor and Green governments, except to say that Labor is greedier and has got much better at it than Liberal. Furthermore, Andrew Barr boasts about how he has increased our rates.

Written and authorised by Lucinda Spier, Canberra Community Voters Party.

 

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38 Responses to
A pox on both their houses as rates bite
bj_ACT 1:44 pm 06 Oct 16

Bringontheevidence is missing the key evidence. Reduced stamp duty is not equating to lower house prices or lower mortgages in Canberra. The old reduce tax to increase activity and price may indeed be the outcome of the policy. Surely more land releases will drive this outcome rather than increased rates.

The issue is lower stamp duties may help the upwardly mobile who upgrade to bigger and better houses, but the struggling homeowners who are thinking about how they pay their mortgage and their extra rates are not even about upgrading houses To take advantage of lower stamp duty. The same argument you put forward matched the property council and developers in lobbying for the tax change but it isn’t being borne out by reality.

That’s why I advocate a balance between rates increases and the removal of stamp duty, a balance to support the strugglers not just benefit real estate investors and those trading up to a more expensive house.

rommeldog56 1:42 pm 06 Oct 16

bringontheevidence said :

Incorrect. Firstly, once fully implemented rates will be a lower overall cost than stamp duties for the same revenue.

What rubbish.

bringontheevidence 10:23 am 06 Oct 16

Acton said :

bringontheevidence said :

It’s not ‘rates’ to be used for services, it’s a land tax. And yes, you will pay more in this tax, but less in other taxes like stamp duties.

A land tax is the most efficient way to raise revenue for a Government, bar none. Unfortunately very few Governments ever go down that path because of ignorant fear campaigns like this one (proudly funded by gambling revenue, possibly the most socially damaging of all).

You, your children and your childrens children will benefit from the removal of stamp duties and other wasteful, inefficient taxes for decades to come.

Home owners do not benefit from a reduction in stamp duty because they have already paid it. Instead they are hit by +50-70% rates increases, which impacts on their home budget year after year.
Average rates on houses in the ACT have over just 5 years increased from $1406 to $2152 (53%) with increases across suburbs ranging from 46% in Tuggeranong to over 70% in North and South Canberra.
http://apps.treasury.act.gov.au/budget/budget-2016-2017/budget-booklets/taxreform/changes-in-residential-general-rates-to-date-for-houses-And-units
Any savings in stamp duty, which is only paid once on purchase, is offset by yearly 10% increase in rates. Assuming stamp duty is eventually abolished, you save on a one-off expense, but are paying more overall, for evermore in ongoing yearly rates.
Those who most benefit from the push for a reduction in stamp duty are property developers, real estate agents and speculators.
Why? Because for this cohort stamp duty is a sales cost that goes to the government instead of into their pockets through a corresponding home price rise, profit or commission increase.
If you reduce/abolish stamp duty, home buyers avoid a government tax, the increase in demand leads to an increase in house expenditure, upwards pressure on house prices, resulting in more house sales, profits and commissions. Why else would the Property Council be so supportive? The losers are all existing and future homeowners.
Housing becomes less affordable because of the rise in property prices, increase in rates and impact on family budgets – for us and our children.

Incorrect. Firstly, once fully implemented rates will be a lower overall cost than stamp duties for the same revenue. That’s the whole point. You’re forgetting the ‘hidden’ costs of stamp duty, i.e. the interest on the larger than normal mortgage buyers have to take out to cover the additional cost of stamp duty, the extra rent that needs to be paid while buyers are saving to buy their house, the excess costs buyers face because they are pushed towards larger, more expensive homes early so that they don’t face additional stamp duties when they upsize later on, and the huge costs of people living in unsuitable homes because they don’t want to pay stamp duty when they move suburb closer to work or downsize when their kids move out of home.

And second, most of the headline rate rises are driven by higher property costs. I.e. your asset is worth more!! If you like the Government could have been releasing tonnes of new land on the outskirts to flood the market and keep prices and rates down, but I don’t think that would be your preference. You seem to want the benefits of higher asset value but without the cost of higher rates.

Acton 5:27 pm 05 Oct 16

bringontheevidence said :

It’s not ‘rates’ to be used for services, it’s a land tax. And yes, you will pay more in this tax, but less in other taxes like stamp duties.

A land tax is the most efficient way to raise revenue for a Government, bar none. Unfortunately very few Governments ever go down that path because of ignorant fear campaigns like this one (proudly funded by gambling revenue, possibly the most socially damaging of all).

You, your children and your childrens children will benefit from the removal of stamp duties and other wasteful, inefficient taxes for decades to come.

Home owners do not benefit from a reduction in stamp duty because they have already paid it. Instead they are hit by +50-70% rates increases, which impacts on their home budget year after year.
Average rates on houses in the ACT have over just 5 years increased from $1406 to $2152 (53%) with increases across suburbs ranging from 46% in Tuggeranong to over 70% in North and South Canberra.
http://apps.treasury.act.gov.au/budget/budget-2016-2017/budget-booklets/taxreform/changes-in-residential-general-rates-to-date-for-houses-And-units
Any savings in stamp duty, which is only paid once on purchase, is offset by yearly 10% increase in rates. Assuming stamp duty is eventually abolished, you save on a one-off expense, but are paying more overall, for evermore in ongoing yearly rates.
Those who most benefit from the push for a reduction in stamp duty are property developers, real estate agents and speculators.
Why? Because for this cohort stamp duty is a sales cost that goes to the government instead of into their pockets through a corresponding home price rise, profit or commission increase.
If you reduce/abolish stamp duty, home buyers avoid a government tax, the increase in demand leads to an increase in house expenditure, upwards pressure on house prices, resulting in more house sales, profits and commissions. Why else would the Property Council be so supportive? The losers are all existing and future homeowners.
Housing becomes less affordable because of the rise in property prices, increase in rates and impact on family budgets – for us and our children.

bj_ACT 2:08 pm 05 Oct 16

bringontheevidence said :

It’s not ‘rates’ to be used for services, it’s a land tax. And yes, you will pay more in this tax, but less in other taxes like stamp duties.

A land tax is the most efficient way to raise revenue for a Government, bar none. Unfortunately very few Governments ever go down that path because of ignorant fear campaigns like this one (proudly funded by gambling revenue, possibly the most socially damaging of all).

You, your children and your childrens children will benefit from the removal of stamp duties and other wasteful, inefficient taxes for decades to come.

Yes stamp duties are inefficient, but unfortunately the rates model that the ACT Government adopted was in line with the wishes of the real estate institutes, property developers and property tax experts who lobbied for the change.

The new rates model has hit inner city pensioners hard and outer suburban working poor with mortgages and renters very hard.

After the realisation that the rates incomes to ACT government were higher than expected, I think Andrew Barr should have proposed a tweak to the system to reduce the impact on the residents it’s hurting, not just an across the board decrease in the rates rise to 7% for 2017.

bringontheevidence 12:57 pm 05 Oct 16

It’s not ‘rates’ to be used for services, it’s a land tax. And yes, you will pay more in this tax, but less in other taxes like stamp duties.

A land tax is the most efficient way to raise revenue for a Government, bar none. Unfortunately very few Governments ever go down that path because of ignorant fear campaigns like this one (proudly funded by gambling revenue, possibly the most socially damaging of all).

You, your children and your childrens children will benefit from the removal of stamp duties and other wasteful, inefficient taxes for decades to come.

pink little birdie 10:50 pm 04 Oct 16

dungfungus said :

madelini said :

Acton said :

I agree with what you say about rates. However, realistically we are going to end up with either a Labor or Liberal ACT Government, so what we need is a good block of reliable community representatives to rein in the worst excesses and incompetance of Labor (rates, tram, Skywhale, clubs, Cotter, Glebe Park, Brendon Smyth, Joy Burch, public ‘art’, junkets, hospitals….), or to keep a possible Liberal alternative honest…

Hey hey hey. I won’t hear a word against Skywhale. She is majestic, and has aged quite well, reputation-wise – much like Blue Poles.

“She?”

How do you assign gender to something like Skywhale?

I think it was the mammary glands that gave it away

dungfungus 10:26 pm 04 Oct 16

madelini said :

Acton said :

I agree with what you say about rates. However, realistically we are going to end up with either a Labor or Liberal ACT Government, so what we need is a good block of reliable community representatives to rein in the worst excesses and incompetance of Labor (rates, tram, Skywhale, clubs, Cotter, Glebe Park, Brendon Smyth, Joy Burch, public ‘art’, junkets, hospitals….), or to keep a possible Liberal alternative honest…

Hey hey hey. I won’t hear a word against Skywhale. She is majestic, and has aged quite well, reputation-wise – much like Blue Poles.

“She?”

How do you assign gender to something like Skywhale?

rommeldog56 7:03 pm 04 Oct 16

HiddenDragon said :

Labor now has road-side signs which say Trams and A New Hospital – Canberra Can Do Both (or words to that effect) – that answers the question about what will happen to rates if the Labor/Green government gets yet another term.

ACt Labors ‘we can have both” only came about because of the early focus on Health/Hospitals instead of the tram, by the Libs.

Unfortunately, ACT Labor has not said how we can afford to have both.

Despite saying that if re elected, ACT Labor would sign contracts for team stage 2 to Woden, they refuse to say how much that will cost, including crossing the Lake). Cost of tram stage 1 will be b$1.78 according to the ACT Auditor General. So, b$2+ for stage 2 perhaps ?

Additionally, an ex head of ACT Treasury has said that all tram stages will cost about b$14 all up.

So, “we can do both” ??????? Pigs might fly. What a farce.

Robert of Braddon 6:25 pm 04 Oct 16

I recently bought an investment property: an older house on a large block. Given the ordinary state of the house, it didn’t attract much rent. But because it’s a rental property of large land size, it incurred the most extraordinary land tax and rates.

In the end, the rates and land taxes alone cost me as much as the rent I earned. So I’ve had it vacant for the last 6 months and will probably sell it in the future for the mere capital gain: 12 months as an empty house.

Coming from Sydney, I was shocked when I arrived here and experienced the size of the rates in the ACT, especially given the municipal services are so backward.

We lament housing shortages — and then create a system that produces the sort of perverse outcome that it’s better to leave a house vacant than rent it out.

HiddenDragon 5:05 pm 04 Oct 16

“Chief Minister Andrew Barr lamented that he could only increase rates 7% this year because it is an election year. This begs the question, how much would he have increased them if it wasn’t? One can only speculate that it would have been his usual 10%.”

Labor now has road-side signs which say Trams and A New Hospital – Canberra Can Do Both (or words to that effect) – that answers the question about what will happen to rates if the Labor/Green government gets yet another term.

madelini 5:01 pm 04 Oct 16

Acton said :

I agree with what you say about rates. However, realistically we are going to end up with either a Labor or Liberal ACT Government, so what we need is a good block of reliable community representatives to rein in the worst excesses and incompetance of Labor (rates, tram, Skywhale, clubs, Cotter, Glebe Park, Brendon Smyth, Joy Burch, public ‘art’, junkets, hospitals….), or to keep a possible Liberal alternative honest…

Hey hey hey. I won’t hear a word against Skywhale. She is majestic, and has aged quite well, reputation-wise – much like Blue Poles.

pink little birdie 2:31 pm 04 Oct 16

What is your parties policy on housing accessibility then?
For many people in Canberra they can afford a mortgage and the elevated rates but the deposit and stamp duty are large stumbling block?
I also realise that you are targeting the demographic of this website with your post which is older people more likely to own their homes or have mortgages and possibly investment properties.

Andrew Zed 12:29 pm 04 Oct 16

There is no correlation between increased rates and increased services. In Giralang we have endured increased rates with reduction of services at the same time as the ACT government/ Labor/ Greens, actively undermine the approved DA for shops. A pox on all their houses. The only way to change this situation is to vote for someone else.

Acton 12:08 pm 04 Oct 16

I agree with what you say about rates. However, realistically we are going to end up with either a Labor or Liberal ACT Government, so what we need is a good block of reliable community representatives to rein in the worst excesses and incompetance of Labor (rates, tram, Skywhale, clubs, Cotter, Glebe Park, Brendon Smyth, Joy Burch, public ‘art’, junkets, hospitals….), or to keep a possible Liberal alternative honest.

The question I would ask any candidate is what have they done for the community in the years before this election.

Have they been organising and leading community meetings?

Do they have a record of effective advocacy in the community?

Without a proven record of community activism will they be representing the community, or some other agenda?

Show me actions not words. Past performance is the best indicator of future performance.

It would be unfortunate if those who pop-up just before an election draw votes away from independent candidates with a solid record and strong liklihood of effective future advocacy. That will only perpetuate Labor’s extortionary rates. Good luck, but my #1 vote will go to a different independent.

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