“A rates bill in the order of $8000 to $10,000 a year for a retiree is devastating. How is this a ‘fairer taxation system’. There is a failure to understand the complexity of wealth versus income,” writes political columnist MICHAEL MOORE.

Have you ever wondered how your rates are calculated? Your rates notice will tell you that the calculation is made on the unimproved value of the land. However, this is only a small part of the story.

The government manipulates the level of rates you pay through a series of other interventions. The most pliable, and significant manipulation, is the “rating factor”. There is no explanation of the calculation of this “rating factor” in your rates notice, no transparency.

The reason behind this is the ACT government’s expenditure has doubled since Andrew Barr first became Treasurer in 2011. They cannot control expenditure, so the rates keep rising.

Independent MLA, Fiona Carrick, exposed the lack of transparency in the rates notices through the government’s failure to identify how much of your rates is spent on interest payments (CN July 31). 

Additionally, the government has also failed to explain, in your rates notice, just how rates are calculated. This is despite a large heading identifying “How your rates are calculated for 2025-26”. No wonder! It is smoke and mirrors.

Consecutive Labor governments have preached that the long-term tax reform process is for a fairer taxation system. The focus is on wealth held in property, as this delivers a more progressive revenue system intended to fall more heavily on those who can afford it.

There is a difference in rates calculations for residential land, residential units, commercial land and rural land. This column will just focus on residential land – although it is a similar story for the other two. The Revenue Office website states there are “two components: a fixed charge and a valuation charge”.

The fixed charge is a very regressive form of taxation as are the levies that together amount to around $1500 for every ratepayer. This flies in the face of a “fairer taxation system”. 

The calculation of the “rating factor’ varies on the value of the property for residential land (as it does for residential units). The land value is multiplied by a variable “rating factor”. This figure changes from 0.2708% of the property valuation for properties valued under $150,000 through to 0.5734% of properties valued over $1,000,000.

Using a smoke-and-mirrors approach, the government changes these percentages with every new budget. The government simply decides how much money they wish to raise and plays with the range of percentages in the “rating factor” to deliver the financial outcome that suits them. To this they add a fixed charge that this year varies from $406.20 to $4214.75.

The outcome of this process can be seen across a range of suburbs. The government argues there will be an average rate increase of 3.75 per cent. This claim beggars belief when so many suburbs have increases of from 4 per cent to 18 per cent.

Using inner-Canberra as an example, at the high end, Forrest ratepayers face an increase this year of 18 per cent. In Griffith and Yarralumla, the increase is 10 per cent, while Campbell, Braddon and Kingston are looking at an increase of around 7 per cent. Ainslie will increase by 4 per cent and Hackett, Lyons and Mawson by 3 per cent.

In Tuggeranong Gowrie, Monash, Richardson and Theodore increase by 4 per cent. In Wanniassa, Bonython and Conder the increase is 5 per cent. Calwell, Chisolm and Oxley will have a 3 per cent increase. There is a similar pattern across Canberra.

The focus on wealth misses the ability to pay. Many people who live in older suburbs bought their houses 30 or 40 years ago. The land values have increased. However, the ability to pay has decreased substantially as people retire, rely on superannuation, savings and pensions for their income. 

A rates bill in the order of $8000 to $10,000 a year for a retiree is devastating. How is this a “fairer taxation system”. There is a failure to understand the complexity of wealth versus income.

Policy decisions made in the 2025-26 Budget include “$521.3 million of new tax measures, and initiatives incorporating fees and charges amendments”. These include huge increases in costs of such things as registration, ambulance levy, driver licences, fines and utilities taxes.

The tax reform process was meant to deliver reductions in inequitable fixed charges that provided disincentives. What a joke. Calling a levy “Safer families” or “Health Levy” or “Police, Fire and Emergency” is simply an attempt to justify a further regressive taxation approach. Canberrans have had enough of smoke and mirrors. 

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.

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