There is pleasure and pain for Canberra households in this year’s territory budget with the phasing out of “unfair” taxes but with hundreds of dollars in extra fees and charges.
The budget’s “cost of living statement,” an initiative forced on the Government by the Opposition and ACT Greens, shows an expected increase of $640 in government fees and charges and an expected $461 increase in utilities, before household compensation, driven by the Federal Government’s carbon tax.
These figures apply to a household enjoying wages growth of about $4800 during the financial year.
Treasurer Andrew Barr used this year’s budget to launch his long awaited reforms of the territory’s tax system.
Despite a projected $318 million budget deficit in 2012-2013 and record capital spending, Treasurer Andrew Barr says his “nation leading” reform of inefficient taxes and charges will begin next month.
The changes mean the ACT will be the first jurisdiction to begin to implement the changes to “inefficient taxes,” recommended by Treasury Secretary Ken Henry in his 2010 tax review.
But it will be a 20-year process to phase out residential and commercial stamp duty which will begin on July 1, with the tax burden shifted onto the general rates base although Mr Barr is promising a soft landing for householders.
The government promises rates will rise by as little as $123 on average in the first year and a quarter of the city’s households will see a reduction in their residential rates bills of up to $29.
Meanwhile, homebuyers can look forward to immediate stamp duty reductions of $2450, on a house worth $500,000, rising to just over $7000 in four years.
The territory’s bureaucracy will feel the heat with 180 positions in the “administrative wing to go”, without forced redundancies, over the forward estimates as the government tries to save $180 million over the four-year period.
Duties on general insurance, life insurance and transfers of subleases will be abolished along commercial land tax and the already announced cuts to payroll tax will also begin next month.
There has also been up to $900 million in capital spending promised in 2012-2013, part of a $1.7 billion building program over the four-year forward estimates period, part funded by a $490 billion in borrowings during the next two financial years.
But a decision on the most eagerly anticipated project, the city-to-Gungahlin transit corridor, has been put off again.