Analysis of Taxation Reforms: Factiva Database Article Review, 2019

This report analyzes an article from the Canberra Times, sourced from the Factiva database, discussing the Canberra Chief Minister Andrew Barr's response to criticism regarding the government's taxation reforms and backbilling of property owners. The article details the controversy surrounding increased commercial rates, particularly in the Braddon and Phillip areas, and the impact on businesses. Barr defends the reforms, attributing the issue to a gap in coordination between lease variations and rates valuation, while acknowledging the 'bill shock' experienced by some property owners. The report also covers the re-evaluation of land values, competition among businesses (particularly car dealerships), and the government's perspective on the impact of rising rates on business confidence and investment in the city, supported by data. The inquiry, sparked by these re-evaluations, continues to examine the complexities of the Australian taxation system and its impact on various stakeholders.

Page 1 of 2 © 2019 Factiva, Inc. All rights reserved.
SE News
HD Chief Minister regrets rates bill shock to property owners, defends reforms
BY Katie Burgess Katie Burgess Assembly Reporter
WC 800 words
PD 23 February 2019
SN Canberra Times
SC CANBTZ
ED First
PG 4
LA English
CY (c) 2019 The Canberra Times
LP
Chief Minister Andrew Barr has admitted charging land owners up to five years 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.
TD
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 property 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 co-ordination 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 in 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.

Page 2 of 2 © 2019 Factiva, Inc. All rights reserved.
"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."
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 in 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 the 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.
NS e211 : Government Budget/Taxation | gpol : Domestic Politics | e21 : Government Finance | ecat :
Economic News | gcat : Political/General News | gpir : Politics/International Relations
RE austr : Australia | apacz : Asia Pacific | ausnz : Australia/Oceania
PUB Federal Capital Press of Australia Pty Ltd
AN Document CANBTZ0020190222ef2n00011