Chief Minister Andrew Barr has admitted charging landowners up to five years' worth of rates in one hit and giving them 28 days to pay was an "issue of regret", but has defended his government's taxation reform during a parliamentary inquiry on Friday.
The committee was examining the government's decision to backbill property owners for the charge, tied to the increase in value of their properties.
It occurred for properties where there had been an application to change the land use in the past.
When the land use changed, the value went up, but the commercial rates did not rise with it.
The discrepancy was picked up when the ACT Revenue Office did a broad revaluation of the whole area.
At least one Braddon building owner was forced to sell their building after receiving a bill for hundreds of thousands of dollars.
Committee chair Vicki Dunne said that building was now boarded up.
"It seems to be to be a pretty hamfisted way of doing it and it did adversely impact on people and now some of those buildings are empty," Mrs Dunne said.
While officials said the Revenue Office could be "flexible" with payment plans and it was the responsibility of the leaseholder to know their tax obligations, Mr Barr acknowledged government could have caught it sooner.
"There was a gap between that lease variation and the rates valuation catching up with that but that is an issue of regret clearly and I think these particular circumstances and cases have highlighted there needs to be better coordination so that there wasn’t a bill shock coming later," Mr Barr said.
He suggested there could be a system in place in future where the Planning Directorate, upon approving a lease variation, notifies the ACT Revenue Office that a revaluation is required.
He also suggested that multiple transactions in one part of the city could result in a re-evaluation of the whole area.
However Mr Barr ultimately played down the impact of rising rates on businesses across the city.
He said the data did not support the claim the increases were having a negative effect on business confidence, and that ultimately Canberra businesses were better off because of the lower payroll taxes.
“From a territory-wide perspective the data wouldn’t support that [argument], in that we’ve seen increased levels of investment business growth, and the greatest growth in gross state product of any state and territory consistently for some period of time," Mr Barr said.
“There would not appear to be any support evidence to suggest that for example the ACT economy was in recession or for example the number of businesses operating in the territory was in freefall in fact the data shows the exact opposite, we have had very strong growth in the territory economy outside of the public sector in particular."
Car dealerships drove up rates through competition for Melrose Drive sites
The inquiry was in part sparked by the re-evaluation of land values in pockets of commercial land across Canberra, which pushed up commercial rates.
Some car dealerships on Melrose Drive in Phillip saw increases of about 300 per cent, with some businesses being hit with a bill more than $100,000 more than previous ones.
Mr Barr rejected criticism that the government was trying to push car dealers out of city, pointing to the Territory Plan which has service suburbs all around the city.
ACT revenue commissioner Kim Salisbury said in the Phillip case, what drove the increase in values and thus was competition between car dealerships to buy land in the area.
"Phillip is of limited size and a number of those sites were obviously seen as quite desirable locations and what we saw was a bidding for those sites above what we’d seen previously for sales in that particular area," Mr Salisbury said.
"So what you’re saying Mr Salisbury was there was a desire to stake out Melrose Drive essentially so there has been pressure on other businesses there because the car dealers want to stake out Melrose Drive," Mrs Dunne asked.
Mr Salisbury said he could not speak to people's intentions, only observe what occurred in the market.
We saw sites that could be used for potential car dealerships, the prices that were paid to acquire those sites were higher than they’d previously been," Mr Salisbury said.
“What it does is establish a market rate for commercial land in that area. Where the lease of a particular site is similar to one nearby then that would have a flow onto that but it would come down to the specifics of the lease and what’s allowed on that land."
The inquiry continues next week.