Apartment owners in Canberra will face an average rate rise of $150 from July 1 on top of an across-the-board the 7 per cent increase, a move Chief Minister Andrew Barr says makes the territory's taxation system "fairer".
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The changes, which passed in the ACT Legislative Assembly on Thursday, will bring the rates of apartment owners closer to rates of house owners.
Under the new method of calculating rates, Mr Barr said rating factors will be applied to the higher value base on the whole value of land.
Currently rating factors are applied to the lower value base of the individual value of the unit.
"It is currently the case a penthouse apartment valued at over $1 million can pay significantly less rates than a very modestly priced house in an outer suburb," Mr Barr said.
"The average general rates bill for housing is almost double those for units in 2016/17 despite both types of property owners generally having access to the same level of ACT government services."
The government is increasingly looking towards apartments as a source of revenue as the number of multi-unit developments under construction soars and the building of standalone homes stagnates.
In 2015-16, 2507 new apartments were built, compared with 2164 stand-alone houses.
Treasury officials said last month the average increase is $265 over two years - $150 from July this year and another $115 from July next year.
The changes were foreshadowed in last year's budget and coincide with an overall rate rise of 7 per cent for all homeowners, as part of the government's shift to higher rates and lower stamp duty.
The Canberra Liberals opposed the changes on the basis they would be "most aggressive" to owners in dual-occupancy developments.
"The amendment is going to disadvantage a larger number of Canberrans at a time when housing affordability is an issue," Liberals leader Alistair Coe said.
"I think it's quite possible some will see increases of several hundreds of dollars in one year alone. Then when you compound that with overall rates increases in the vicinity of 7 per cent, we're going to see a real impost on many households around Canberra."
However Mr Barr said their opposition was "not unexpected when it comes to fairness and equity in taxation policy".
Greens crossbencher Caroline Le Couteur supported the changes on the basis tax increases were necessary for "good government".
Ms Le Couteur said while the unit rates rise would make the system "slightly more fair and slightly closer to equity and parity", she indicated support for further rates reform.
"I understand in Victoria ... rates are based on the improved capital value and I think that is something we should be considering looking at from the viewpoint of equity," Ms Le Couteur said.
"If your asset is worth the same it's logical that your taxation on it should be the same."
Insurance tax was also abolished under the changes passed.
Mr Barr said the bill formally completed one of the government's major tax reform initiatives that began five years ago "to make the territory's taxation system fairer, simpler and more efficient".
"For those interested in ... the abolition of bad taxes today is a day for celebration," Mr Barr said. "Mission accomplished on stage one of tax reform."
The government began a program of tax reforms in 2012. They moved to simplify stamp duty payments in December last year wth a view to abolish stamp duty over the next two decades.
