ACT rates to increase by 3.5 per cent in 2021-22

Most ratepayers will not get a reprieve on this rise, as the ACT government has chosen to stop its coronavirus pandemic relief measures for the tax.

It will mean the rates bill shock will be greater for two-thirds of, or 110,000, Canberra households that did paid less in rates this financial year due to an offset from a $150 rebate.

Chief Minister Andrew Barr has revealed that most ratepayers will not receive a further rebate this coming financial year, with pensioners the only to benefit as the government will increase the pensioner rates rebate by $50.

The rebate, which the government said would help 15,000 households, would offer a 50 per cent rebate on rates for pensioners capped at $750, this is up from the existing $700 cap.

However, the government will decrease fixed rate charges. For houses, this would fall from $923 to $800 and for units it would drop from $958 to $850. Mr Barr said this would mean lower increases for properties with lower unimproved values.

"This will further increase the progressivity of our tax system," he said.

The Chief Minister had previously flagged that further rates rebates would be considered while the pandemic continued but only a very small portion of ratepayers will get a rebate.

Mr Barr said a universal rebate was not needed due to increased economic activity.

"We looked at in light of the economic circumstances and the very strong economic rebound which households would need the support and where we should target it," he said.

Mr Barr said support had also been targeted at low-income earners through concessions to electricity bills, which came after it was announced power prices would rise by 12 per cent. About 31,000 low-income households would get the $800 concession.

"The reason we did that is that the utilities concession predominantly goes to rental households who don't receive a benefit through the rates system," Mr Barr said.

Last year, every Canberra household received a rates rebate of $150. This meant 110,000 households paid less rates than the previous year and about 60,000 households paid more.

About 24,000 properties were hit with an increase of between zero and 1 per cent, about 34,000 had an increase of between 1 and 5 per cent, with the remainder rising by more than 5 per cent.

The increase for 2021-22 was expected. Last year, Mr Barr announced residential rates rises would slow to an average of 3.75 per cent a year over the next five years as part of the third stage of the government's major tax reforms.

It's part of a major ACT reform to phase out stamp duty and replace the tax with rates revenue. However, the government has still benefitted from stamp duty, which contributed to a $41 million windfall in government revenue in the first quarter of this year.

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The 3.5 per cent increase is the rise of the total value of rates revenue that the ACT government will receive, this increase does not have to be distributed evenly between rate-paying households.

The ACT government calculates rates based on the unimproved land value of properties.

The government normally releases the average rate rises for each suburb in June, but the government will not release this until the August budget. Instead, the government has provided examples based on average unimproved land values.

Under the 2021-22 increases, a three-bedroom house in Tuggeranong with an unimproved land value of $315,400 could expect a $28 rise on the previous year, or 1.33 per cent.

A four-bedroom house in the Woden Valley with an unimproved value of $490,000 could expect a $136 rise, or 4.49 per cent.

For units, a three-bedroom unit in the inner south or inner north would see rates bills rise by $87, or 4.42 per cent.

A one- or two-bedroom unit in Belconnen would actually see a decline, down $54 on the previous year.

Cuts are expected to stamp duty, with the figures for 2021-22 to be released next week.

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