Minister Barr: Tax reform verdict: stronger Territory economy, increased production, household consumption and investment
- Written by ACT Government
Released 27/08/2020
The ACT’s nation leading tax reform is benefiting households and the local economy whilst remaining revenue neutral, according to an analysis of impacts undertaken by leading independent institutions.
Under the tax reform program, the ACT Government is reforming the Territory’s taxation system to be fairer, simpler and more efficient.
Inefficient taxes such as conveyance duties are gradually being phased out, with revenue being replaced by increases in general rates.
The ACT is now the only jurisdiction in the country that doesn’t charge insurance duty. The ACT has the highest payroll tax free threshold in the country at $2m, with 90% of Canberra businesses no longer paying it. Our stamp duty rates have fallen significantly to be the second lowest in the country. They will be the lowest in the country in the next phase of reform.
The comprehensive and independent analysis of the reforms was undertaken by the Australian National University, the University of Canberra, Victoria University and ACT Treasury, with guidance from the independent Tax Reform Advisory Group.
Key findings of the analysis show that the ACT’s tax reform has been revenue neutral to date, meaning total tax revenue has been about the same as it would have been without tax reform. What has changed is the tax mix, not the total tax take.
The analysis also found that stamp duty reductions in the ACT are helping more first-home buyers and lower income households to access the housing market.
More broadly, findings concluded that the ACT’s tax reform is increasing local production, household consumption and investment, leading to more, higher paying jobs.
Despite anecdotal commentary to the contrary, there was no definitive evidence that tax reform had led to higher rental prices in the ACT. In fact, that analysis found that there were more properties are available to rent due to tax reform.
As has been previously indicated, with the heaviest reform work now in the past, general rate increases will be lower in the future. With the COVID-19 emergency rates rebate of $150, average general household rates in Canberra will not increase in this this current financial year, and 110,000 Canberra households will see a rates reduction this financial year.
In the next stage of the ACT’s tax reform to now commence from 2021-22, rate increases will continue to be lower than the first two phases of reform. Average general rate increases for households and commercial properties will be capped at no more than 3.75 per cent following this financial year.
In developing these settings, the Government is taking into account the significant impact of the ongoing COVID-19 pandemic on our economy and the need for certainty for households and businesses.
See full details of the analysis undertaken.
- Statement ends -
Section: Andrew Barr, MLA | Media Releases
