ACT Property Council Exec. Director Catherine Carter Photo: Larissa Nicholson
The ACT Government has had to explain a 75 per cent writedown in revenue from its controversial tax on property developers.
The territory's consolidated financial report published on Thursday showed the government collected less than $2.1 million in the lease variation charge (LVC) in the December quarter after projecting income of nearly $10 million.
The fee, levied on developers for rezoning land to allow apartment and other multi-unit developments, has been controversial since its introduction in 2011 with the opposition and property groups opposed to the charge. At one point in the debate the Property Council claimed the tax would strip $100,000 from the price of family homes in Canberra's inner north.
Property Council ACT executive director Catherine Carter said on Friday that the government was not learning from the lower-than-expected revenue raised.
"The failure by government to raise revenue from the Lease Variation Charge will be a big negative for the budget, but should also be an important lesson for them that it's time they took heed," Ms Carter said.
"The Lease Variation Charge is bad for the citizens of Canberra.
"It is a massive tax making most people worse off by reducing the incentive to redevelop - putting land to better use - and driving up the cost of housing."
Ms Carter said the LVC tax regime needed to be fixed. "We urge the government to take a closer look at the ongoing problems with the LVC and to work with industry to find a better way," she said.
Treasurer Andrew Barr said the government believed that the tax money was in the development pipeline.
"I'm advised that just under 100 approved applications in the system, to the value of about $21 million, of assessed Lease Variation Charge, are awaiting payment," he said. ''That is in residential, commercial and mixed-use development so we'll see continued inflows of the Lease Variation Charge that will be occurring over time."
The Treasurer claimed bipartisan support for the basis but not the level of the tax and said the charges were staying.
"That charge is here to stay and even the Canberra Liberals agreed with that in their election policy," Mr Barr said.
"They talked about retaining a 75 per cent remission rate but they accepted the basis of the charge.''
He said developers should be forced to pay when they received boosts to the value of properties.
"It's there to ensure that when a developer gets a windfall change on what they can do on a block of land, when they've done nothing to earn that change other than get a policy change … then part of the uplift in the economic value of that land will be taxed and returned to the community," Mr Barr said. "It's a very simple principle, it's a very efficient tax and it's one that should be applied in our leasehold system."