A new report for Prosper Australia finds the ACT government’s twenty-year tax reform program is achieving more than its three key aims of predictability, efficiency and equity.
Prosper Australia Research Director, Karl Fitzgerald said: “The transition has delivered subtly but surely. Canberra’s revenue stability has improved, the economy is growing strongly and the market is more accessible for homebuyers.”
“As expected, the reforms have made it a lot easier for the Territory to balance its budget and plan for growth. The average Treasury forecast error for revenue has fallen from 7.9% before the reforms to 2.6% since the reforms began.”
“We estimate that the ACT economy will now be more than $130 million better off per year as a result of the transition to general rates.This concurs with Treasury commissioned studies released earlier this year.”
Owner-occupiers are driving the market in the ACT
Fears that the reforms would cause ACT land prices to fall have proven unfounded with continued rises in residential land, house and unit prices.
“The warnings of calamity have been avoided, with many property owners actually coming out ahead,” Mr. Fitzgerald stated.
“With the growth of investors easing, owner occupiers are now winning access to more homes.”
Since the beginning of the reforms in 2012 the proportion of housing finance for owner-occupiers has risen from 60% to 78%.
“Not only is the tax burden shared more evenly across all land owners, rather than concentrated on those who buy and sell property, but more Canberrans will own their own homes as a result of the abolition of stamp duties and the rise in general rates.”
The commercial market has been more tempered.
“It appears that commercial buyers have recognised higher rates require a lower upfront purchasing bid and commercial prices have moderated.” concluded Fitzgerald.
This is Prosper’s second report on the ACT’s 20 year transition. Read The First Interval by Cameron Murray.