Canberra Rates Rant

A contrary view (to the Henry/Barr way of thinking), from across the Ditch:

http://www.macrobusiness.com.au/2013/10/getting-development-incentives-right/

The rates assessors have clearly not been distracted from their purpose by Alan Fitzgerald’s memorable zinger about Narrabundah, or by the peacocks or the tyre slasher – more likely they have fond memories of the now relocated truffels.

Queen_of_the_Bun said :

breda said :

Thanks for responses. In answer to questions and comments:

I live in Narrabundah (not the upmarket part). Half of the people in my little street are either retired or close to it. Retirees like me don’t suddenly have an extra $1,000 year lying around because the ACT government can’t manage its finances. My UCV is exactly the same as last year, my very modest income has not increased, I’m not getting any extra services, but am, with my neighbours,expected to absorb my rates almost doubling overnight.

It’s just as well the ACT elections are not coming up.

I should point out that the fact that our suburb has recently become more desirable to developers and yuppies is beyond our control. It has no measurable benefit to us unless we sell up. Most long term residents are far from privileged – 20 years ago it was regarded as one of Canberra’s less desirable areas, and most of the people who bought here were at the lower end of the income scale.

As for the politics of envy, such as saying that my neighbours and I should be grateful to have a roof over our heads, that is precisely the attitude that is dragging this country down. Instead of applauding people who have worked and scrimped and saved to buy a modest home in a modest suburb, we are accused of being heartless plutocrats.

And, while stamp duty is a dreadful way of raising revenue, as has been pointed out, we have already paid it. Again, the only upside for us is if we sell up and buy elsewhere. A tax system that relies on forcing people out of their homes is hardly equitable, IMO.

Perhaps I should apply for a grant? I could call my house a heritage project (it’s old enough!) or spray some graffiti on it and call it public art.

Breda, as someone who has rented in Narrabundah on and off since 1996 and has only just managed to buy into the area, I find your depiction of it as an undesirable suburb really offensive.

You should consider how lucky you are to be in such a great suburb, so close to amenities. If your rates are so high, move northside to Kaleen or south to Calwell.

Up until the last few years, it was well known as an undesirable suburb.

Queen_of_the_Bun said :

Breda, as someone who has rented in Narrabundah on and off since 1996 and has only just managed to buy into the area, I find your depiction of it as an undesirable suburb really offensive.

You find it as offensive as you like. Narrabundah (at least lower Narrabundah) used to be an undesirable place to live. It’s not any more, of course – far from it. But to take offence at history is not very smart.

Queen_of_the_Bun said :

breda said :

Thanks for responses. In answer to questions and comments:

I live in Narrabundah (not the upmarket part). Half of the people in my little street are either retired or close to it. Retirees like me don’t suddenly have an extra $1,000 year lying around because the ACT government can’t manage its finances. My UCV is exactly the same as last year, my very modest income has not increased, I’m not getting any extra services, but am, with my neighbours,expected to absorb my rates almost doubling overnight.

It’s just as well the ACT elections are not coming up.

I should point out that the fact that our suburb has recently become more desirable to developers and yuppies is beyond our control. It has no measurable benefit to us unless we sell up. Most long term residents are far from privileged – 20 years ago it was regarded as one of Canberra’s less desirable areas, and most of the people who bought here were at the lower end of the income scale.

As for the politics of envy, such as saying that my neighbours and I should be grateful to have a roof over our heads, that is precisely the attitude that is dragging this country down. Instead of applauding people who have worked and scrimped and saved to buy a modest home in a modest suburb, we are accused of being heartless plutocrats.

And, while stamp duty is a dreadful way of raising revenue, as has been pointed out, we have already paid it. Again, the only upside for us is if we sell up and buy elsewhere. A tax system that relies on forcing people out of their homes is hardly equitable, IMO.

Perhaps I should apply for a grant? I could call my house a heritage project (it’s old enough!) or spray some graffiti on it and call it public art.

Breda, as someone who has rented in Narrabundah on and off since 1996 and has only just managed to buy into the area, I find your depiction of it as an undesirable suburb really offensive.

You should consider how lucky you are to be in such a great suburb, so close to amenities. If your rates are so high, move northside to Kaleen or south to Calwell.

Well!! I live in Calwell and I take offence at your notion that we are so far out that our rates are as cheap as. I have been round Narrabundah for various bits and pieces and wouldn’t buy in the areas I could afford for nix. I don’t really think that, but I do think that no one else seems to have taken offence at Breda’s take on his suburb which makes your post look odd.

I never understand that why living somewhere that is leafy, green and a lovely 20 minutes away from really anywhere that I might need to go like work, is a problem. I lived in Sydney for 10 years, quite a few of those very close to where I work in North Sydney, and quite frankly I hated seeing my office block every time I wanted to catch the train anywhere.

breda said :

Thanks for responses. In answer to questions and comments:

I live in Narrabundah (not the upmarket part). Half of the people in my little street are either retired or close to it. Retirees like me don’t suddenly have an extra $1,000 year lying around because the ACT government can’t manage its finances. My UCV is exactly the same as last year, my very modest income has not increased, I’m not getting any extra services, but am, with my neighbours,expected to absorb my rates almost doubling overnight.

It’s just as well the ACT elections are not coming up.

I should point out that the fact that our suburb has recently become more desirable to developers and yuppies is beyond our control. It has no measurable benefit to us unless we sell up. Most long term residents are far from privileged – 20 years ago it was regarded as one of Canberra’s less desirable areas, and most of the people who bought here were at the lower end of the income scale.

As for the politics of envy, such as saying that my neighbours and I should be grateful to have a roof over our heads, that is precisely the attitude that is dragging this country down. Instead of applauding people who have worked and scrimped and saved to buy a modest home in a modest suburb, we are accused of being heartless plutocrats.

And, while stamp duty is a dreadful way of raising revenue, as has been pointed out, we have already paid it. Again, the only upside for us is if we sell up and buy elsewhere. A tax system that relies on forcing people out of their homes is hardly equitable, IMO.

Perhaps I should apply for a grant? I could call my house a heritage project (it’s old enough!) or spray some graffiti on it and call it public art.

Breda, as someone who has rented in Narrabundah on and off since 1996 and has only just managed to buy into the area, I find your depiction of it as an undesirable suburb really offensive.

You should consider how lucky you are to be in such a great suburb, so close to amenities. If your rates are so high, move northside to Kaleen or south to Calwell.

Tetranitrate said :

HiddenDragon said :

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

Even as someone who’s in favor of land taxes/rates being as high as possible at the expense of other taxes, I still can’t grasp why they should be structured as progressive taxes. They’re not actually a tax on an income stream, they’re effectively taking in part of the economic rents or potential economic rents from an asset.

If anything making them progressive actually means it’s not a perfectly efficient tax anymore as it creates tax incentives to subdivide high value land and would more generally favor smaller blocks.
Why should a 5 or 6 bedroom ‘mansion’ on a massive block have a significantly greater tax liability (assuming it more than compensates for the fixed charge) than two three bedroom houses on the same m^3 of land in a similar area?

I know the determination of unimproved land value don’t really work quite like that in practice, but to some extent it has to be the case. There’s not really a good case for rates being progressive at all.

In this case, I think the progressivity has much to do with the politics of divide and rule, and boiling the frog slowly. It has worked well so far, and by the time it sinks in for the majority, it will be too late.

watto23 said :

Both sets of my grandparents and my parents all sold and moved to cheaper housing after they retired. They decided to not whinge about it and move to somewhere they can afford to live.

1/ So you’re happy for public housing tenants to stay in oversized housing well into their declining years but not homeowners?

2/ Many home owners still have to sell up in retirement and down size simply because they still owe money on homes that they have lived in but this shouldn’t mean that others who have worked hard to pay off their homes in their working lives should be forced to move. (As others have pointed out reverse mortgages are a crap product).

3/ Often older homes do not fetch much more than the land value meaning that these older people are forced into apartments or out into the suburbs, away from services and at a time when they are less likely to be able to drive. I find it ironic that many older persons end up living in places like Weston Creek where the bus service is appalling.

milkman said :

HiddenDragon said :

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

You’re obviously not a lefty, then.

I’ll have to think about that – it might be a situational thing, like one’s stance on important matters such as flipping.

HiddenDragon said :

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

Even as someone who’s in favor of land taxes/rates being as high as possible at the expense of other taxes, I still can’t grasp why they should be structured as progressive taxes. They’re not actually a tax on an income stream, they’re effectively taking in part of the economic rents or potential economic rents from an asset.

If anything making them progressive actually means it’s not a perfectly efficient tax anymore as it creates tax incentives to subdivide high value land and would more generally favor smaller blocks.
Why should a 5 or 6 bedroom ‘mansion’ on a massive block have a significantly greater tax liability (assuming it more than compensates for the fixed charge) than two three bedroom houses on the same m^3 of land in a similar area?

I know the determination of unimproved land value don’t really work quite like that in practice, but to some extent it has to be the case. There’s not really a good case for rates being progressive at all.

Both sets of my grandparents and my parents all sold and moved to cheaper housing after they retired. They decided to not whinge about it and move to somewhere they can afford to live.

HiddenDragon said :

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

You’re obviously not a lefty, then.

HiddenDragon said :

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

But shouldn’t I just get it anyway? I mean, isn’t this massive sense of entitlement worth anything? Sheesh…

I am happy enough to pay progressive rates of tax on my income because it’s money I have actually received – it’s not a figure dreamt up by the ATO as a result of a periodic, cursory guesstimate of my means.

I find it interesting that many of those who are very keen on the shift from stamp duty (which is typically based on an actual market figure) to annual land taxes are also firm believers in the economic wisdom of the flattest possible income tax scales – economic theory, and the evidence quoted in support of it, seems miraculously to conform to the world view and personal circumstances of those advance it.

breda said :

Seriously, you are saying that because appreciation of land values are enough to cover “tax liability”, that’s the end of the discussion?

You have completely missed the point. Here is X, someone who has worked and saved and finally bought their home. Suddenly, X’s “tax liability” rises. Nothing else has changed, including X’s income. According to you, what X has to do is sell their home to someone who is wealthier and can afford the “tax liability”, or alternatively watch their asset waste away under a reverse mortgage and deferred rates. Nobody knows if or how that will last them to the end of their life.

Brilliant. You will have us all in public housing in no time. But, who will pay for it?

Welcome to progressive taxation. Your means have increased, so the proportion you pay increases.