A long-running dispute between the Canberra Airport and the ACT Revenue Office over land value has prompted the government to seek amendments that would force the airport to pay more tax.
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ACT Chief Minister Andrew Barr said the change would create a new method of taxation for the airport, which would consider future developments at the airport and ensure it paid its fair share in coming years.
Canberra Airport is preparing to launch a $50 million seven-story hotel next month, which is seen by many as crucial to securing direct international flights to the ACT.
The airport is also home to the Brindabella Business Park that caters for 7000 workers and 46 businesses with 19 commercial buildings.
Mr Barr said a three year disagreement about rates had become a matter of public concern and was likely to result in significant "legal and professional costs" if it continued.
"This would risk significant revenue used to provide health, education and municipal services to the people of Canberra," he said.
A Canberra Airport spokeswoman said the changes would result in higher rates but the group was pleased to have reached an agreement with no further action required.
"We have accepted a valuation that is higher than previous valuations and the amount we will pay is 30 times larger than the rates and land tax imposed when we bought the airport in 1998," she said.
"Further, the unimproved value will increase if we build additional non-aeronautical developments, and thirdly our rates will index based on the average growth of commercial property in Canberra."
The government and the airport agree the matter is complex and dates back to the privatisation of airports, which required operators to negotiate rates with state and territory governments.
"This did not occur in the ACT as arrangements for the Canberra Airport relied on ACT legislation to determine rates and other taxes on airport lands," Mr Barr said.
Mr Barr said rates for land across the ACT were determined in accordance with unimproved land value, although the valuation of the airport lease ranged from zero to tens of millions of dollars.
"The unique combination of the crown lease for the airport site - which was developed when the airport was privatised - and the airports essential infrastructure result in the need for this alternate methodology," he said.
Mr Barr said the land rates for the Canberra Airport would be dictated by a growth and development index measuring the total floor space of buildings on airport land.
"[The development index] will take account of current and future land development at Canberra airport," he said.
"The growth index is based on the average change in commercial unimproved values across the whole of the ACT, excluding the airport land".
Mr Barr said the amendment would provide the airport with certainty on rate bills for next fifteen years and allow the Canberra Airport group to plan for the future.
"It also provides certainty for everyday taxpayers and ensures they continue to receive a fair contribution from Canberra Airport," he said.
"The bill also provides certainty to the government about the need to secure predictable revenue to provide the best for Canberra residents."
A Canberra Airport spokesman said the company was "pleased we have reached agreement and looked forward to progressing more positive business matters".
The amendment will be debated by territory politicians later in the year.
