ACT Greens: Keeping rates fair while we reform the tax system

Caroline Le Couteur, MLA

The ACT Greens are seeking the community’s feedback on a proposal to reform the rates system—namely, changing how rates are assessed, from land value to property market values.

The ACT Greens support the tax reform move from stamp duty to rates, but we need to keep the rates system fair while tax reform continues over the next 10 to 20 years. 

“We want to hear from the community on a proposal we’ve developed to improve the fairness of our rates system. As we move to more government revenue coming from rates and less from stamp duty, fairness becomes more important,” said Greens Treasury spokesperson Caroline Le Couteur.

Rates are currently based on land value, not market value, so the value of the buildings and gardens are not included. It means that the least expensive house on a street will typically pay the same (or possibly even more) rates as the most expensive house. A new large 500 square metre house could pay less than a small older house on a larger block. 

“Under our proposal, the lower the market value of your home, the lower the rates you’ll pay,” Ms Le Couteur said.

“We must ensure that the tax system is as fair and equitable as possible, for young people entering the market, older Canberrans on lower incomes, and the more vulnerable in our community. Studies have shown that property market value is much more closely related to wealth than land value and so this proposal is all about increasing fairness.”

This system is widely used by local governments in Victoria, South Australia and New Zealand.

First home buyers

“Australia is facing a housing crisis. At the federal level, the major parties have set the rules so that buying a home or having decent rights when you rent is harder than ever,” Ms Le Couteur said. 

“For first home buyers in Canberra, our proposal would tax people with less expensive houses less that people with more expensive houses—a fairer tax outcome for young people entering the housing market for the first time.”

Low-income Canberrans

Government analysis shows that while for most Canberrans rates were below 2% of their income, some people, such as a single aged pensioner in an average house in Garran, are paying 14% of their income in rates alone.  This will increase rapidly while tax reform continues, which is not sustainable.

There are concessions and deferments that go some way towards fairness. However, it is hard to make the system fair when small, old houses can be paying the same or more as a large house down the street worth $500,000 more.

Fairness for Units and Houses

It is hard to say what the land value is for an apartment on the 5th floor of a 20 storey tower. Our proposal values both units and standalone houses on their market value so it is fair to all home owners in Canberra.

Community consultation: we want to hear from you

Canberrans are encouraged to contribute to the Greens’ rates discussion, with a paper released today discussing a shift from land to market rates.

The discussion paper can be found at www.carolinelecouteur.com.au/keeping_rates_fair

Community consultations are open until 12 October 2018.