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Are we all dead yet? (Libs on tripling rates)

By johnboy - 1 November 2013 13

Jeremy Hanson and Brendan Smyth are teaming up to band the drum on rates again.

Andrew Barr has been forced to table documents in the Assembly that show the analysis and models for his tax reform program. Despite vehement claims to the contrary during the election campaign, the documents show there is no possible scenario for rates not to triple when the reforms are implemented, Leader of the Opposition Jeremy Hanson said today.

“ACT Labor’s data tabled in the Legislative Assembly today definitively shows that rates will more than triple under these reforms, the only thing that changes is how long it will take to happen,” Mr Hanson said.

“It ranges from a period of seven years (Table 4 pg 10), to an outside period of 15 (Table B1 pg 26), but rates triple.

“Worse still, tripling is the lowest amount rates are increased under these reforms.

The relevant documents are here and here.

While it’s nice to see the Liberals somewhat vindicated we’re still waiting to hear the answers to the big question:

    If not through rates how do they plan to fund the operations of the ACT Government, and if they intend to reduce those operations what are they going to cut?

What’s Your opinion?


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13 Responses to
Are we all dead yet? (Libs on tripling rates)
cmdwedge 1:00 pm 04 Nov 13

banco said :

I hope Labor pays you for your services on here johnboy.

About time someone said it. This site has gone to the dogs. No balance anymore, just a JB and Barcham inner-north circle jerk.

banco 7:25 pm 01 Nov 13

I hope Labor pays you for your services on here johnboy.

davo101 5:24 pm 01 Nov 13

pepmeup said :

The major problems with the new rate rates, is that they are progressive, so people with a higher value property pay both a higher rate and have a higher multiplier. Why not have a flat rate?

The rates system is not progressive it’s regressive. You’re forgetting that there is a large intercept (ie: what you’d pay if your AUV was zero) of $746. So if you own a strata titled block with an AUV of $150 000 you’re paying 0.73%, if you own a house block with an AUV of $450 000 you’re only paying 0.48%. In fact at no point does the effective rate go up.

breda 4:26 pm 01 Nov 13

watto23 – oh, here we go again. Social equity is achieved by forcing people to move out of their homes, because the land has appreciated in value due to circumstances beyond their control.

Good luck with selling that to the punters. As for what it says about the proponents, my guess is that they are divided between those who don’t own a home but are eyeing off the olds’ equity, and those whose comfortable circumstances will be unaffected. Creeps, either way.

pepmeup 3:57 pm 01 Nov 13

The major problems with the new rate rates, is that they are progressive, so people with a higher value property pay both a higher rate and have a higher multiplier. Why not have a flat rate? That way people with more expensive blocks still pay more because their higher Ucv is multiplied by the same rate.

Or the gov could spend more of the rates money on areas where it is collected. Given the inner north and inner south pay the most, you would think we would have the best kept facilities. Instead all the money raised by the rates go to build facilities for people living on cheap small blocks on the edge of Canberra

watto23 3:44 pm 01 Nov 13

davo101 said :

HiddenDragon said :

It would be interesting to know which scenario is now being followed

There are two scenarios:
1. Do it in one year
2. Bring it in over 20 years.

I’m guessing they’re going with option two. There are three versions of option two presented as a sensitivity exercise. Which of the three we’ll follow will depend on how the WPI and expenditure pans out (along with the political and economic environment) over the next 20 years–good luck with forecasting that.

If people sought the details rather than the slogans, you’d know that stamp duty on insurance is also being removed in 2015/16 I think which is 10% on insurance premiums. Yes by then you’ll be paying more in rates, but we will always have rate rises. When the new way of taxing us is implemented it will be much fairer than what we have now. What it will enable is for people sitting on valuable land to move to a less valuable area, make $100k+ and not have to pay any taxes out of it to buy another house. Or for all the renters complaining they can’t afford a house, by 2031 stamp duty would possibly be $100K or more so it will be easier to buy as well and maybe more people will live in Canberra rather than Queanbeyan. I bet they have already discussed this as being a problem in 10-15 years when the stamp duty has been reduced to make a difference.

davo101 2:06 pm 01 Nov 13

Deref said :

It is a sensible economic reform – but double-dipping by making those of us who’ve already paid stamp duty pay again is gross dishonesty and maladministration.

Right; so how would you implement the transition then?

HiddenDragon said :

I wouldn’t presume to forecast, but my best guess is that increases in rates won’t be fully matched by reductions in stamp duty and we may end up with a 50/50 mix of (somewhat) higher than otherwise rates and (slightly) lower than otherwise stamp duty

Well the problem was always going to be that if a week is a long time in politics then 20 years must be an eternity. If they stick with the budget the rates to duty ratio will go from 54:46 to 61:39 by 2016/17; but will they have the ticker to do it?

HiddenDragon 1:07 pm 01 Nov 13

davo101 said :

HiddenDragon said :

It would be interesting to know which scenario is now being followed

There are two scenarios:
1. Do it in one year
2. Bring it in over 20 years.

I’m guessing they’re going with option two. There are three versions of option two presented as a sensitivity exercise. Which of the three we’ll follow will depend on how the WPI and expenditure pans out (along with the political and economic environment) over the next 20 years–good luck with forecasting that.

I wouldn’t presume to forecast, but my best guess is that increases in rates won’t be fully matched by reductions in stamp duty and we may end up with a 50/50 mix of (somewhat) higher than otherwise rates and (slightly) lower than otherwise stamp duty – unless there is a national movement to phase out stamp duty, with incentives from the Commonwealth. I am familiar with the well-worn arguments about the evils of stamp duty and the virtues of land taxes, but I think governments will eventually decide that complete policy purity is something they can’t afford in this area.

davo101 12:44 pm 01 Nov 13

HiddenDragon said :

It would be interesting to know which scenario is now being followed

There are two scenarios:
1. Do it in one year
2. Bring it in over 20 years.

I’m guessing they’re going with option two. There are three versions of option two presented as a sensitivity exercise. Which of the three we’ll follow will depend on how the WPI and expenditure pans out (along with the political and economic environment) over the next 20 years–good luck with forecasting that.

Deref 12:31 pm 01 Nov 13

It is a sensible economic reform – but double-dipping by making those of us who’ve already paid stamp duty pay again is gross dishonesty and maladministration.

Diggety 12:09 pm 01 Nov 13

“If not through rates how do they plan to fund the operations of the ACT Government, and if they intend to reduce those operations what are they going to cut?”

Prioritise the operations of ACT Government, and start cutting from the bottom of the list.

HiddenDragon 11:33 am 01 Nov 13

It would be interesting to know which scenario is now being followed – my impression is that after an heroic effort in the first year, a more moderate approach is now being taken for residential rates – the election result may have had something to do with that. It may also be the case that someone has realised it may not be smart to get too much out of kilter with what is happening (or not) across the border, and that a review of federal taxation arrangements might just have implications for the ACT laboratory.

I will stick to my view that the slowing of the federal gravy train – including the just announced Service-wide recruitment freeze – will cause increasing numbers of Canberrans to question whether some of the supposedly important and essential things on which the ACT Government spends money are not quite so important and essential.

davo101 11:00 am 01 Nov 13

Definitely a case of a plague on both houses. The Liberals for their stupid scare campaign against what is a very sensible economic reform. And Labor for have enough courage to try and implement this but not enough courage to defend it.

By 2031 you’re going to be paying 140% more tax regardless of whether or not this reform happens. The question is do you want to be punched in the kidneys once a year or smacked in the face with a baseball bat every 15 or so years when you buy a property?

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