Figures published by the ACT Government as part of the Consolidated Financial Report for the June Quarter 2012 have revealed a major shortfall in revenue which the Government expected to receive from the controversial Lease Variation Charge (LVC), introduced as a new tax on 1 July 2011.
The Consolidated Financial Report shows that while budgeted revenue for 2011-12 was $22,382 million, actual revenue received was only $8,725 million, leaving a revenue shortfall of $13,657 million.
Notably, revenue is significantly down from the 2010-11 financial year when the ACT Government collected $14,067 million under the former Change of Use Charge system.
Property Council Executive Director, Catherine Carter, said: “The numbers reveal that the ACT Government has appreciably failed to achieve its budgeted revenue from the LVC. The Government has indicated that the shortfall has been caused in part by timing issues associated with the lodgement of development applications.”
“The Property Council does not accept this explanation.”
“While it is evident that a number of development applications have been lodged, many are now not proceeding further because of the size of the LVC. It is also worth noting that a proportion of the revenue received to date is believed to be related to applications lodged under the former CUC system, where charges were significantly less than the amounts involved under the LVC.”
“Earlier this year an independent report by the Allen Consulting Group, The ACT Lease Variation Charge: Implications for housing affordability, development and growth, released in May 2012, confirmed that the design, scale and application of the charge would have significant, adverse consequences for housing affordability in the Territory, as well as sustainability and urban infill; and Canberra’s long-term growth and development.”
“Now, in a further sting for the Government, and for the Canberra community, it has become clear that the new Urban Improvement Fund announced as a 2012-13 Budget initiative, with $22 million in funding promised to come directly from the LVC, will not be realised.”
“The ACT Government needs to recognise that the LVC policy is wrong and has failed.”
“The Property Council again calls on the Government to scrap the LVC redevelopment zone super-tax and replace it with a simple, affordable and unambiguous system with appropriate charges, before irreparable damage is done,” Ms Carter said.
For further information contact:
Catherine Carter, ACT Executive Director, 02 6248 6902 or 0412 330 079