If you don't like the rates at least stamp duty is coming down when you try to sell

Deref said :

I understand that those of us who paid stamp duty when we bought will also have to pay the increased rates.

If that’s right, it stinks to high heaven.

Everyone (bar the few that fall under an exemption/concession) is still paying stamp duty for quite a while yet – check out:
http://www.treasury.act.gov.au/TaxReform/Documents/factsheet_ConveyanceDuty.pdf
for the details of the fairly gradual drop off of stamp duty rates.

Deref said :

I understand that those of us who paid stamp duty when we bought will also have to pay the increased rates.

If that’s right, it stinks to high heaven.

The problem is how to eliminate one tax and replace it with another. In this case you’re replacing an large upfront payment with a smaller ongoing payment. If you just replaced one with the other then there would be a large shortfall in the revenue which would have to be paid for with reduced services or borrowing that effects everyone.

I’m guessing that the 20 year transition period has been chosen because the average “hold period” for a property in Canberra is about 7 years so over the period most people will buy or sell a property and get some advantage from the removal of stamp duty.

I understand that those of us who paid stamp duty when we bought will also have to pay the increased rates.

If that’s right, it stinks to high heaven.

Directed at Zed, I might point out yet again that neither Labor (or Liberal or any other party) is responsible for the “doubling (of) rates in many suburbs” – the owner’s land value would have had to more than doubled in order for their rates to double.

Perhaps Zed might ask the owners which they would prefer – land value as is and pay more rates, or have their land value halved and pay half as much rates (roughly)?

peter11 said :

I don’t get the “Stamp duty is an unfair tax”

Rates are a much more inequitable tax than stamp duty ( which is what is going to be increased to fund the reduction in stamp duty).

You’ve made a good argument for some inequities of rates, but stamp tax is worse. At least with rates the revenue base that provides our services is spread across all residents, however imperfectly – whereas with stamp duty the revenue is taken disproportionately from those who move house.

Stamp duty is an inefficient tax, as it discourages people from moving when it would otherwise be economically efficient for them to do so.

I don’t get the “Stamp duty is an unfair tax”

Rates are a much more inequitable tax than stamp duty ( which is what is going to be increased to fund the reduction in stamp duty)

I don’t understand how it can be “fairer” that on the same street a three bedroom townhouse can pay a quarter of the rates that the three bedroom house nextdoor pays. They both consume as many services. ( Units only pays rates based on their portion of the UCV value )

I don’t understand how it can be “fairer” for a house with a single person to pay the same rates as 10 people. 10 People consume a lot more services. Federally we have different allowances for singles and familys for somethings.

I don’t understand how it can be “fairer” for the same size block a suburb away to have half the rates.

I don’t understand how it can be “fairer” to dramtically charge increasing rates for people who bought their house a long time before the UCV went up.

I understand that a per dwelling charge based on UCV is the easiest way to adminster a state tax but it definitely isn’t an equitable means.

davo101 said :

Seriously are all of our politicians innumerate?

Yes, and they hope that most of the voters are too.

Seriously are all of our politicians innumerate?

OK for the slow ones in the audience…..

In 2011/12 the ACT collected $268 million in conveyance duties and $324 million in rates and land tax. If you instantly replaced stamp duty with increased rates and land taxes they’d have to go up 268/324 which is 84%. If you transition this in over 20 years (assuming no inflation) then this would be an increase of 3.1% pa in the rates and land taxes (ie: after 20 years rates and land taxes would be 84% higher). Given that there is inflation and other rises in costs then you can think of this as being an additional 3% increase each year on top of the other increases for the next 20 years.

It’s not exactly rocket science.