THE ACT Government’s agreement in principle to the abolition of duty on conveyances (stamp duty) is a significant step in the right direction.
This follows the release of the ACT Taxation Review, headed by former Treasurer Ted Quinlan, as a starting point for consultation on how to reform the taxation system.
The review found that stamp duty is the most unstable and unpredictable tax, and unfair in that it raises about a quarter of the total taxation revenue of the Territory from about 9 per cent of the people whose circumstances may impose the necessity to move to different accommodation.
It is also good to see the Government agreeing to, in principle, adopt a broad-based land tax as a base for revenue replacement to ensure there are no disincentives to households and businesses to locate and invest within the Territory’s borders.
The review recommends supporting urban densification to improve the efficiency of the city, provide greater choice and opportunity to leverage and enhance existing and social infrastructure.
While there would be little disagreement with this, the objective is undermined by the recommendation to use the Lease Variation Charge (LVC) to capture the increase in valuation of a parcel land from its higher-valued use.
The panel’s failure to analyse the impact of the LVC on existing home owners, buyers of redeveloped properties and renters leaves a big gap in the review.
Catherine Carter is ACT executive director of the Property Council of Australia