ACT Liberals promise no more increases to rates, no more cuts to stamp duty

The Liberal promise would bring a halt to Labor's 20-year tax reform, which while well received by economists has been politically difficult, with big increases in rates year on year.

Under Labor's tax changes, rates for homeowners will increase 7 per cent a year for the next five years, from July 2017. Commercial rates will increase 6 per cent a year.

The Liberals say they will return to the previous system in which rates increases are tied to the wage price index, which is between about 3 per cent and 4 per cent a year.

They will also freeze the budgeted cuts to stamp duty, a tax paid by people buying houses and other properties.

Labor's plan is to gradually reduce stamp duty. From June next year, a person buying a home worth $500,000 would pay $12,800 in stamp duty under Labor's plan, a decrease of $660 on what the same buyer pays at the moment. A person buying a $750,000 home would pay $25,960, a fall of $1210 on what is charged this year. Similar cuts are factored into the budget in each year going forward.

People buying commercial properties at the lower end, worth less than $1.5 million, were to have their stamp duty halved next year and abolished the year after. But that won't happen under the Liberals.

The Liberals say they would make no more more cuts to stamp duty for house buyers or people buying commercial properties.

"Whilst no tax is an ideal tax, we firmly believe that what the government has done is unfair if it were to continue into the future," Alistair Coe said. "So what we are saying is that we will maintain the existing stamp duty regime and also maintain the existing rates regime, but we will not go any further down Andrew Barr's rates reform package which has seen significant increases in household rates."

The government insists its switch from stamp duty to rates is revenue neutral, with the amount lost from cuts to stamp duty and insurance taxes (which have been abolished already) evenly matched by the amount gained from increases to rates. Questions have been asked about whether that promise of revenue neutrality is bearing out in practice, but with no reconciliation published in the government's budgets and the revenue neutrality promise evidently applying over the entire 20-year reform, there is no easy way to assess the claim.

The Liberals have previously rejected the government's assertion its changes are revenue neutral, accusing it of loading up the rates hikes without offering corresponding cuts to stamp duty.

But releasing their rates and tax policy on Wednesday night, Mr Coe said he was accepting the government's claim of revenue neutrality for the purposes of the tax policy. If the government's policy was revenue neutral, their freeze would also be revenue neutral and would have no impact on the budget.

"People who have access to the data have told us it's revenue neutral," Mr Coe said. "We accept there are vagaries with the government's policy with regard to whether it's revenue neutral or not, but we are dependent on the same information to make our assessment for now."

The Liberals will not reverse the government's shift of a higher rates burden to apartment owners. From July 2017, apartment owners face an average increase of 20 per cent, or $230. About $150 of that is a result of a new way of calculating their rates, which will stay under the Liberals.

Mr Coe said it was too complex to model changes to rates for apartment owners from Opposition, but the Liberals would look again at the issue if they won government.

The Liberals appear to have struggled with their rates policy, suggesting on Wednesday that reverting to the former rates system would mean tying rates increases to increases in unimproved property value. In fact, rates increases were limited before Labor's reforms to the wage price index. Conceding their policy could be "clearer", a spokesman said he would make some "tweaks".

Mr Coe said he would submit his rates and tax policy to treasury for costing.