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Tax time headache?
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Ten years, 11 years, what’s a rates tripling between friends?

By johnboy 5 June 2013 32

rates

Liberal Leader Jeremy Hanson is taking this opportunity to say “we told you so”:

During the election campaign, the Canberra Liberals used a graph from the Quinlan Tax Review that showed rates would triple in 10 years throughout campaign brochures, flyers, letters and television advertisements.

“Throughout the election, Katy Gallagher and Andrew Barr both denied this table and both said it was a lie,” ACT Opposition Leader Jeremy Hanson said today.

“Yesterday’s Budget illustrates almost exactly that the rates are tripling right now. Instead of 10 years, it will be just over 11 years. The maths is inescapable.

What’s Your opinion?


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32 Responses to
Ten years, 11 years, what’s a rates tripling between friends?
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watto23 2:20 pm 06 Jun 13

There is no easy way of changing this. I’ve already paid stamp duty so if i decide to move in the next few years i’ll pay a reduced stamp duty again and higher rates, but in terms of political spin, getting rid of stamp duty is much better for budgeting and the ACT economy. Its hard to show this in a 3 word slogan like “triple your rates” or “stop the boats”, which is what people listen to. And yes a few people will end up paying a little more, but the money has to come from somewhere and i doubt any government will increase stamp duty, so it will still come from increased fees and rates, plus we’ll have stamp duty.

chewy14 1:59 pm 06 Jun 13

thebrownstreak69 said :

chewy14 said :

thebrownstreak69 said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Sorry, but the logic doesn’t stack up. You would be penalising people who already paid stamp duty (unless we’re planning on giving these people a different cost of).

Yes, land taxes are a much more efficient method of raising revenue. What logic doesn’t stack up?

Some people will pay more initially but over time everyone benefits. Or do you suggest that we should never change taxes to a better system?

Land taxes are already levied on investors annually.

People who currently own houses have already paid stamp duty.

How exactly is this a better system? If anything, reducing transfer costs encourages speculation.

It increases housing mobility (which is a good thing) and provides the government with a much more stable revenue stream.
It makes it easier for older people (and in fact everyone) to downsize into more appropriate houses freeing up larger properties for those who need them more.
It reduces the amount of investors sitting on empty properties due to increased holding costs.

I don’t think that it would increase speculation as it will most likely lead to reductions in house prices because of the much higher holding costs.

Tetranitrate 1:36 pm 06 Jun 13

thebrownstreak69 said :

People who currently own houses have already paid stamp duty.

Yeah and that’s unfortunate, but it we can’t forever holding off on improving the tax system because someone has already paid some tax that’s going to be abolished. This is why it’s being implemented gradually instead of over one or two years though.

thebrownstreak69 said :

How exactly is this a better system? If anything, reducing transfer costs encourages speculation.

Adding to holding costs reduces speculation. It makes holding land or properties vacant more expensive. In general it also makes gambling for capital gains less desirable, and goes some way to tying prices to rental returns, which is IMO very desirable in the long term as far as the stability of the market and the banking system goes.
On its own, you’re probably right that removing stamp duty probably wouldn’t help much as far as speculation goes, the combination change has to be a net positive in this area.

Stamp duty also discourages behavior that’s rational and desirable too, like downsizing by empty-nest couples, and makes it punitive for people to move to move, restricting labor mobility (not so much an issue within the ACT, but more broadly in Australia),

thebrownstreak69 12:46 pm 06 Jun 13

chewy14 said :

thebrownstreak69 said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Sorry, but the logic doesn’t stack up. You would be penalising people who already paid stamp duty (unless we’re planning on giving these people a different cost of).

Yes, land taxes are a much more efficient method of raising revenue. What logic doesn’t stack up?

Some people will pay more initially but over time everyone benefits. Or do you suggest that we should never change taxes to a better system?

Land taxes are already levied on investors annually.

People who currently own houses have already paid stamp duty.

How exactly is this a better system? If anything, reducing transfer costs encourages speculation.

watto23 12:26 pm 06 Jun 13

Baggy said :

dtc said :

Baggy said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Which benefits me only if I choose to sell my old house and buy a new one. I have no such plans, therefore there is absolutely no benefit to me in removing stamp duty.

It seems to me that my question remains valid.

So its all about you? (as opposed to, say, the wider benefits)

When rates are designed to fund specific services ie garbage disposal and recycling for starters, I should like to think that those services are regularly and effectively delivered. As it stands, they’re not, and so I would like to see some improvement. My suspicion is that we’ll see delivery of the basics drop because money will be drawn from these services to fund pet projects, like more roadside ‘art’.

People have said stamp duty is an inefficient tax. Perhaps, but it is paid only once for the ‘honour’ of buying a home in the ACT. Increasing rates to replace the lost revenue from stamp duty is basically the government saying “F you, you chose to live in the ACT so we’re going to roger you nine ways sideways each and every year”. It’ll also ensure that we are even more higliy taxed than we already are, and if memory serves we’re the most highly taxed jurisdiction in the country already.

You’ll have to forgive me for having grave reservations about it all.

There are many issues relating to this, but people focus on the obvious in that they are paying higher rates. Several side effects of this plan and why it makes sense is Stamp duty is incredibly bad tax, why do you think land is released slowly other than to maximise profits for the government and developers. With a more stable tax platform, other taxes like rego etc may not need to go up as quickly to cover shortfalls. yeah i know I’m being over optimistic on that one, but the point is the money has to come from somewhere and it won’t come from raising higher stamp duty, so we’ll still end up paying for it in much higher fees and taxes.

HiddenDragon 12:22 pm 06 Jun 13

BBQNinja said :

1. Where the hell did this 10% come from? Do the maths based on your own ULV:

$200000: 8.2% increase (1047 to 1134)
$250000: 7.6% increase (1204 to 1296)
$300000: 7.1% increase (1360 to 1458)
$350000: 6.7% increase (1547 to 1651)
$400000: 6.4% increase (1734 to 1845)

I’ll leave more expensive land as an exercise to the reader.

2. WHERE in the budget papers is there ANY forward looking statement, chart, diagram, etc that shows that these increases will be carried on year by year?

All I see is 4 years of stamp duty reductions carried forward, and even that is not a linear reduction.

From what I see there is NO forward estimate of rates period.

That means that next year they could increase them 0%. Or 20%. Or 200%. But guessing that these changes will be made, by the same %, every year for the next 10 years is asinine.

Have a look at table 3.1.3 in this document:

http://apps.treasury.act.gov.au/__data/assets/pdf_file/0012/455979/3.1-Revenue-and-Forward-Estimates.pdf

Unless the projected increases in rates revenue in the years to 2016-2017 are predominantly based on commercial properties, or unless there are some very fanciful assumptions about increases in the numbers of rateable properties, I think it is reasonable to assume that someone is counting on revenue from residential rates rising at about 10% per year for at least the next few years.

It’s also worth looking at the estimates for revenue from those evil and hideously inefficient conveyancing duties – projected to recover quite nicely after the initial adjustment.

This is going to be a slow, painful burn for many Canberrans.

chewy14 12:06 pm 06 Jun 13

thebrownstreak69 said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Sorry, but the logic doesn’t stack up. You would be penalising people who already paid stamp duty (unless we’re planning on giving these people a different cost of).

Yes, land taxes are a much more efficient method of raising revenue. What logic doesn’t stack up?

Some people will pay more initially but over time everyone benefits. Or do you suggest that we should never change taxes to a better system?

BBQNinja 11:54 am 06 Jun 13

Source:

http://apps.treasury.act.gov.au/__data/assets/pdf_file/0005/455981/3.3-Taxation-Reform.pdf
page 98

There is no doubt that rate increases will continue, due to other taxes lessening and spending not being cut appreciably, but “10% every year” is just hand waving with no source.

BBQNinja 11:49 am 06 Jun 13

1. Where the hell did this 10% come from? Do the maths based on your own ULV:

$200000: 8.2% increase (1047 to 1134)
$250000: 7.6% increase (1204 to 1296)
$300000: 7.1% increase (1360 to 1458)
$350000: 6.7% increase (1547 to 1651)
$400000: 6.4% increase (1734 to 1845)

I’ll leave more expensive land as an exercise to the reader.

2. WHERE in the budget papers is there ANY forward looking statement, chart, diagram, etc that shows that these increases will be carried on year by year?

All I see is 4 years of stamp duty reductions carried forward, and even that is not a linear reduction.

From what I see there is NO forward estimate of rates period.

That means that next year they could increase them 0%. Or 20%. Or 200%. But guessing that these changes will be made, by the same %, every year for the next 10 years is asinine.

thebrownstreak69 11:27 am 06 Jun 13

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Sorry, but the logic doesn’t stack up. You would be penalising people who already paid stamp duty (unless we’re planning on giving these people a different cost of).

chewy14 11:23 am 06 Jun 13

Baggy said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Which benefits me only if I choose to sell my old house and buy a new one. I have no such plans, therefore there is absolutely no benefit to me in removing stamp duty.

It seems to me that my question remains valid.

Well ignoring the fact that its highly likely that you will move at some time in the future, do you not consider that getting rid of inefficient taxes and replacing them with better ones is of benefit to all residents through better economic management?

Or is your hip pocket today the only thing you care about?

Baggy 11:20 am 06 Jun 13

dtc said :

Baggy said :

chewy14 said :

Baggy said :

So, given that the rates increase well outstrips what inflation will be, what extra benefits will I be receiving for the extra money I’m expected to pay?

Before paying even more, I’d like to see some simple things meet standards, you know like garbage and rubbish recycling trucks actually showing up.

The removal of stamp duty, a completely inefficient tax. Do you pay even the slightest bit of attention?

Which benefits me only if I choose to sell my old house and buy a new one. I have no such plans, therefore there is absolutely no benefit to me in removing stamp duty.

It seems to me that my question remains valid.

So its all about you? (as opposed to, say, the wider benefits)

When rates are designed to fund specific services ie garbage disposal and recycling for starters, I should like to think that those services are regularly and effectively delivered. As it stands, they’re not, and so I would like to see some improvement. My suspicion is that we’ll see delivery of the basics drop because money will be drawn from these services to fund pet projects, like more roadside ‘art’.

People have said stamp duty is an inefficient tax. Perhaps, but it is paid only once for the ‘honour’ of buying a home in the ACT. Increasing rates to replace the lost revenue from stamp duty is basically the government saying “F you, you chose to live in the ACT so we’re going to roger you nine ways sideways each and every year”. It’ll also ensure that we are even more higliy taxed than we already are, and if memory serves we’re the most highly taxed jurisdiction in the country already.

You’ll have to forgive me for having grave reservations about it all.

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