13 July 2016

Renewed attacks on lease variation charge

| Michael Reid
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The ACT government’s lease variation charge (LVC) has come under renewed fire from the opposition and the ACT Property Council.

Shadow treasurer Brendan Smyth on Friday said the charge was stifling much need residential development, while Property Council executive director Merlin Kong labelled it a “dud” that had raised little money and cost jobs.

Smyth (pictured) said the latest budget update from the Barr government vindicated the Canberra Liberals’ election commitment to scrap the charge in Civic and the town centres for four years.

“Figures in the March Quarterly Consolidated Financial Report demonstrate that the LVC is still stifling higher density residential development where it needs to occur across the ACT, in our town centres,” he said.

“The LVC has only collected a quarter of what the government forecast in last year’s budget which shows that it’s a bad tax, an inefficient tax and a tax on cost of living for Canberrans.

Needs to go

“In the 2015 ACT budget, Andrew Barr claimed the LVC would line government coffers with more than $16 million. Now just weeks out from this year’s budget, the latest consolidated financial report shows the government has only collected about $4.357 million.

“Only the Canberra Liberals have committed to removing this tax, which is adding tens of thousands of dollars to the cost of new units and failing to bring in projected revenue.

“It’s Canberra’s mining tax, a failed tax and it needs to go.”

Kong also criticised the charge for raising less than a quarter of the revenue forecast by the Barr government.

“This is a tax that has raised almost no money and has cost Canberrans hundreds of potential jobs – in its current form, it’s a dud,” he said.

Structural changes

“With the LVC going into its sixth year, and consistently underperforming even with decreased revised targets in the past, it’s time for the chief minister to make structural changes to the LVC.

“The LVC in its present form stifles development activity, and will continue to undermine the government’s plans to stimulate urban renewal and density in our city’s town centres, adjoining suburbs, and transport corridors.

“The Government needs to consider changes to the LVC’s charging methodology, and we’re open to working with government to develop a more sustainable charge that would lead to an increase in the volume of variations.

“Options that result in a fairer effective tax payable per lease variation, recognition of the value of improvement, and offsets for demolition costs and offsite works are a good starting point.”

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