Rates revenue skyrockets well beyond numbers envisaged when ACT embarked on tax reform in 2012

Rates revenue skyrockets well beyond numbers envisaged when ACT embarked on tax reform in 2012
  1. Rates revenue skyrockets well beyond numbers envisaged when ACT embarked on tax reform in 2012
    Treasury's 2012 estimates of the impact of tax reform significantly underestimated the increase in…
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ACT Chief Minister Andrew Barr: Stands behind his tax reform shift from stamp duty to rates. ACT Chief Minister Andrew Barr: Stands behind his tax reform shift from stamp duty to rates. Photo: Rohan Thomson

ACT government rates revenue has skyrocketed to a level well beyond anything envisaged when the government embarked on its historic tax reform in 2012.

Stamp duty revenue is tracking just a little higher than the amount predicted.

Rates revenue has doubled in four years, from $209 million in 2011-12, the year before the 20-year tax reform began, to $423 million in 2015-16.

The figure is more than 50 per cent higher than estimated in the tax reform package.

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  • Big rates and land tax hike for apartment owners

Graphs showing the increase in rates and stamp duty since 2011-12, compared with the estimates in Treasury modelling of the impact of tax reform. Stamp duty has broadly followed the estimates, but rates has well outstripped expectations. Graph: Markus Mannheim


Under tax reform, insurance taxes have been scrapped and stamp duty on house sales is being phased out over 20 years, the revenue replaced by higher rates. The government says the shift is revenue neutral.

But a comparison of actual revenue from rates and stamp duty revenue with the estimates set out in 2012 when Cabinet embarked on tax reform shows Treasury significantly underestimated the amount that would be collected in rates. 

The government had expected to collect $301 million in rates this year (2016-17) under the tax reform changes. In fact, it is on track to collect $450 million. The numbers don't include big increases in levies, including the fire and emergency services levy, the new domestic violence levy and others. They also don't include land tax which is now on a fast upward trajectory.

The stamp duty figures are tracking more closely with what was predicted in 2012. Treasury had expected to be collecting about $237 million in stamp duty by 2015-16. In fact, it collected $268 million.

The 2012 Treasury modelling of the impact of tax reform stresses the figures are estimates only - and the figures look to be outdated from the first year of tax reform, when they predicted rates revenue of $205 million in 2012-13, whereas it was $290 million.

Treasury also made a series of assumptions for population growth (about 1.5 per cent a year), inflation, house prices (just under 5 per cent a year), and house sales. House prices, for one, have outpaced these estimates, …

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