Thursday, February 28, 2013

Why should an owner occupier get cheaper council rates?

Not content with ranting on strata insurance KS has in recent weeks been compiling data for council rates on strata properties. I will leave that particular topic until completeion of the epistle for my divisional councillor.

Trying to compare different councils is a headache to unravel of different terminology and formats. However, a feature which diffentiates Cairns from most larger councils, to its credit,  is that it doesn't offer cheaper rates for owner-occupiers.This is something I have always seen as an abomination driven by politics with no empirical basis.

A renter doesn't ever see a direct rates component of their expenses so it is unlikely to influence their vote. Owner-occupiers are likely to perceive rates as among the most significant influence for their vote. Hence the difference in my view?

I believe there have been calls in the past for this concession from certain populist councillors. When Cairns City Council held public consultations in 2006 vocal groups from the northern beaches also called for owner-occupier concessions. This was backed by a perception that investors (and strata properties were classified as investors in their minds) get tax breaks elsewhere.

They may indeed, however as far as I am aware the Commonwealth Treasury regard the CGT concession for a primary residence as the largest tax break of all.  At the time of the Cairns Council consultations I recall that a certain Kewarra resident was very outspoken on the issue that investors get  tax breaks while he was sitting on a massive tax free capital gain on his Kewarra beachfront home!

Regardless it is certainly beyond the expertise and role of local councils to compensate for any such tax issues when setting rates. So what is the justification? As far as I can see it's just because they can and motivated solely by politics and cultural bias to home ownership?

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