“Over less than 20 years, there has been a 300 per cent increase in rates compared to a lousy 30 per cent decrease in conveyancing duty. No wonder you’re feeling the pinch,” writes political columnist MICHAEL MOORE.

As the costs of grocery, fuel, services and mortgages skyrocket, are you one of the households feeling the pinch?

The ACT government is adding to the pain by constantly increasing taxes. 

Tax reform was a great promise of our Labor government that has now been in power for more than 20 years. The idea was to remove duties that were inconvenient and unpredictable and replace them with an increase in “non-productive” rates and land tax.

The concept is good. But to what extent have they delivered on the promise?

The trouble is that increasing rates and land taxes has not been matched by a commensurate reduction in revenue from duties. 

There were claims of huge reductions in conveyancing duties in the last ACT budget. In December, according to Domain, the median house price was just over a million dollars. In more than two decades of reform, while rates and land tax increased there was a 30 per cent reduction in conveyancing costs at the median price of housing.

At first glance this seems like a huge reduction – but only if rates and land tax are not examined as well. The rates on my own home have increased threefold since 2006-07. It will be a similar story for those who have owned their own homes for any sustained period.

Over less than 20 years, there has been a 300 per cent increase in rates compared to a lousy 30 per cent decrease in conveyancing duty. Granted, this comparison does include a time preceding the commencement of the tax reforms in 2012. Even so, no wonder you’re feeling the pinch.

Motor vehicle registration charges are another area that Canberrans will be feeling the pinch from a voracious ACT government. 

According to the last budget papers: “Total duties (including both property and vehicle transfers) are estimated to be $429.3 million in 2022-23, which is $32.9 million higher than the 2022-23 Budget estimate”. It should be noted that some of this is due to commercial conveyancing.

The big picture is that in 2006-07 revenue from rates was $157 million and from land tax, $63.8 million. A combined income of $220.8 million. This year the revenue from rates was $716 million and from land tax $172 million. A combined total of $888 million.

A fourfold increase over these years could be part of the reason that you’re feeling the pinch!

Over the same period, revenue from duties came close to doubling. For the 2022-23 budget the income from duties was $396 million. In 2006-07 the figure was $228 million. So much for the promise that tax reform will mean a drop in duties countered by an increase in rates!

Canberrans are being taken for a ride.

The government is likely to claim that an increase in the number of households is the reason for the increase in revenue. According to the Bureau of Statistics (ABS) there were 131,274 households in Canberra in 2006. In the census of 2021, the number of households had risen to 186,963 – an increase over the period of 55,689 households.

While there was a fourfold increase in rates and land tax revenue, there was only about a quarter increase in the number of dwellings paying the increase in revenue. No wonder Canberrans are feeling the pinch.

There are those who advocate for using the ACT land revenue system Australia wide. Prosper Australia (an NGO committed to tax reform) recently released a report encouraging other jurisdictions to follow suit. They argue the change has not been politically damaging.

Prosper Australia pointed to a promise at the time the reforms were introduced. The ACT government “promised that the reforms would be revenue neutral, reassuring residents that this was not a tax grab”.

Revenue neutral! Laugh out loud! Other jurisdictions beware – it is an invitation to a tax grab.

The principles on which Prosper Australia argues are sound and are “inspired by US journalist, economist and politician Henry George” they “advocate for shifting taxes from labour to land”.

While the principles are sound, the ability to keep the promise of revenue neutrality needs to be carefully considered before any action is taken for this sort of tax reform. Others should know that this approach requires trust in government, and Canberrans have a right to be bitterly disappointed.

Michael Moore is a former member of the ACT Legislative Assembly and an independent minister for health. He has been a political columnist with “CityNews” since 2006.