Cuts to stamp duty have failed to offset substantial increases to rates and land tax five years into the ACT government's 20-year taxation reform, new analysis has found.
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However the Housing Institute of Australia warned there would be a greater risk to the ACT's economy if the reform was abandoned now.
The institute's latest quarterly ACT outlook said the first stage of the Barr government's reform has consisted of an increase in general rates revenue with no material reductions in stamp duty revenue.
Report authors Tim Reardon and Diwa Hopkins found the government reaped a $196 million windfall over the past four years, thanks to a 38 per cent increase in property tax revenue.
This occurred because the scheduled reduction in stamp duty rates failed to exceed house price bracket creep.
During the four years to 2016-17 inclusive, the analysis found stamp duty revenue rose $80.4 million from $225.7 million to $306.1 million, despite ACT budgets estimating the territory's coffers would actually see a $5.6 million fall in that revenue source in that time.
At the same time, the report shows, total general rates revenue rose $152 million from $292 million in 2012-13 to $444 million in 2016-17.
While homes under $300,000 had the biggest falls in stamp duty over the past five years and the lowest increases in rates, more expensive homes have seen modest savings on stamp duty with bigger rates bills.
The average house price in Canberra was more than $670,000 last month, while the average unit price was more than $431,000.
"Consequently, from the perspective of the overall market, the structure of the reform can more accurately be described as a process of first phasing in the new rates system and then phasing out stamp duties," the report said.
"The former has occurred (although not concluded) during this first stage of the reform program, while the latter has yet to occur in a material way."
The institute supported the ACT's move to phase out stamp duty in principle, describing it as an "inefficient tax" that "has a disproportionately high impact on households that are vulnerable due to changes in their circumstances including employment, health or other family related matters".
It said while the ACT's reliance on stamp duty had fallen, that was largely due to increased revenue from land tax and other areas.
However the report noted stamp duty was also "notoriously bad" for bracket creep, due to house prices rising over time.
Overall the report said the reform was having "anticipated positive impact on the economy … at this early stage".
It also noted there were "significant risks" in pursuing these reforms, particularly if the reform was abandoned or paused before the abolition of stamp duty.
"Without the complete abolition of stamp duty, the tax will again grow to be a punitive tax on house transfers," the report said.
"For the ACT, these risks will increase during the second phase of the tax reforms as the government begins to experience a decline in revenue from stamp duty."
However Treasurer Andrew Barr rejected that there had been no real reductions in stamp duty. He said bracket creep would have been an "even bigger feature" had the rate of stamp duty not been reduced.
"Stamp duty for a $500,000 Canberra property is $7000 lower than prior to reform commencing," Mr Barr said.
"The report is very clear that for lower-value homes there have been material stamp duty reductions with increases in general rates being relatively modest. Our reforms have been calibrated to deliver the most support to the more affordable end of the housing market first - as the HIA has acknowledged. Cutting duty on multi-million dollar properties was not our first priority."
Mr Barr said the government would continue to reduce stamp duty, now insurance and payroll taxes had been abolished.
"With this work now complete, the government will continue with the reduction in stamp duty which will be offset by a lower rate of increases in general rates," he said.
However the report is sure to fuel debate about whether the territory government is doing enough to help those struggling with the increases to rates.
Property Council ACT executive director Adina Cirson said the sector supported the government's overall agenda, but six years in to the 20-year reform agenda presented a timely chance to review the changes.
She said the government had said the reforms would be "revenue neutral", but the property sector was starting to see "significant increases to commercial rates" and it was time to ensure the "balance is right".
"Certainly all eyes are on the ACT and abolition [of stamp duty] is something other jurisdictions are watching closely, but we need to know whether the rate of reduction is keeping up with the rates rises," she said.
Meanwhile, a separate analysis of the ACT's economy has revealed housing investment has peaked, wth moderate growth expected in 2018.
The ANZ Stateometer said "solid" population growth had contributed to "stellar" gross state product growth of 4.6 per cent in 2016-17, with the ACT "on track" for another good year.
