The ACT government’s surcharges to the rates and taxes of units are unjust and, arguably, infringe the human rights of their owners, argues retired economic statistician (Australian Bureau of Statistics and International Monetary Fund) PETER BRADBURY in this (abridged) open letter to Chief Minister Andrew Barr. 

Dear Mr Barr,

IN 2017, your government imposed surcharges on the rates and land tax of unit-titled properties. You refer to this as a new methodology. 

The experience of me and my neighbours is that our two-bedroom townhouses (unimproved value $105,000, market value $351,000) are now asked, with the surcharges, to pay rates and land taxes that are almost identical to four-bedroom block-titled townhouses with unimproved and market values that are more than double ours. 

This is clearly unjust; it doesn’t meet your stated intention for these surcharges “to achieve fairer and more equitable outcomes”.

I have analysed the case you presented to justify these surcharges. In summary, most of the case you presented is incorrect, a misleading use of statistics and as applicable to block-titled properties as it is to unit-titled properties. 

You have not made a valid case for taxing unit-titled properties in a different way to block-titled properties. 

The only thing left is that equity viewed from a market-value perspective differs from equity viewed from a land-value perspective.

Critically, you have not presented any case to support higher taxes on unit-titled properties in comparison to otherwise identical block-titled properties. 

Your case starts with an incorrect assumption that every unit-titled property is significantly different from every block-titled property and, as a result, failed to identify a need to apply a solution to all properties.

The result of all of this is that the surcharges are not compliant with the Human Rights Act 2004 as they represent an invalid discrimination against the guarantees of that act for equality before the law. 

There would appear to be no objective and reasonable justification under section 28 of the act, there are clearly better alternatives to achieve horizontal equity at market value, most obviously rebasing the tax system to market value.

Your methodology seeks to proxy market-value outcomes by adjusting the land value of individual properties so that it delivers horizontal equity viewed from a market-value perspective when a land-value-based tax scale is applied to it. 

The methodology that you have adopted has no chance of delivering horizontal equity against market value because:

• Primarily, it is not related to market value in any way.

• It is not applied and can’t be applied to block-titled properties, despite most of those properties requiring adjustment to achieve horizontal equity across the ACT community. 

• The maximum adjustment factor that the methodology could generate is not large enough for very high capital intensity properties, like high density apartments, to be properly adjusted. 

What you have developed is a discriminatory and arbitrary tax scheme that has increased the number of properties paying more than an equitable amount from both land and market value perspectives. 

The methodology is particularly ineffective in adjusting what appears to be the main target, high-density apartments.

As these surcharges have never been a valid discrimination, they must be repealed and all monies collected need to be refunded with appropriate interest. 

It will be sad for the ACT if the only way that people can get equality before the law is by withholding unjustly levied taxes and/or mounting a human rights class action against the government.

While some of your rhetoric on this issue has been around multi-million dollar penthouses (typically high-density apartments) most unit-titled properties sit towards the bottom of the valuation spectrum (however measured) and are already the prime victims of your tax reform agenda, as a progressive conveyance duty is replaced by regressive rates and land taxes. 

As my analysis shows, you are also failing to even meet your own modest election promises to make rates and land tax more progressive despite a mandate and almost two full terms of the Assembly with an effective majority. 

The prime reason for this is the role that regressive fixed charges play in rates and now land tax. Any serious attempt to bring equity from a market-value perspective would properly review the fixed charges which, if they have any beneficial purpose, seem to be targeting the same issue as these surcharges.

Hoping that the human rights of unit-title owners and renters can be restored without delay.

Peter Bradbury, Holt