Treasurer Chris Steel on Budget day. Photo: Ian Bushnell.
Canberra homeowners will only have to pay a $100 health levy and corporate payroll tax will be adjusted to make up the difference after the ACT Government abandoned its full Budget measure and struck a deal with the ACT Greens before the 1 July implementation date.
The government began negotiations with the Greens after they vowed not to support the imposition of a $250 flat levy on all property owners announced in the Budget only a week ago to help bolster health spending over the next four years.
The government will now introduce a revised health levy, $100 for residential and rural properties, while $250 will remain for commercial properties.
Treasurer Chris Steel said the revised levy would be implemented through a rates instrument and reviewed annually as part of future budget processes, including in the context of ongoing negotiations on the new National Health Reform Agreement.
To offset the reduced revenue from the lower levy, the government will introduce a 2 per cent higher payroll tax rate of 8.75 per cent for large businesses with national payrolls exceeding $150 million from 1 January, 2026 – a decision the Canberra Business Chamber blasted as a tax on jobs.
Mr Steel said the deal ensured the Territory could continue to deliver high-quality health services while maintaining a responsible and sustainable Budget.
“This outcome reflects the government’s commitment to working collaboratively to ensure vital services are funded responsibly, without the need for deep cuts to public services or infrastructure investment,” he said.
Greens leader Shane Rattenbury said that while these changes were not the Greens’ first choice, they were a significant win for the community.
Mr Rattenbury said there was little time to negotiate, with Labor advising that rates notices were due to go out this week and there was no room to delay.
“As a result, there was a significant level of pressure to come to an agreement by the end of today [Monday],” he said.
Mr Rattenbury said the concessions would make this Budget fairer and ease some of the pressure on those doing it tough.
“Importantly, the Greens have only agreed to support these changes for the next financial year. We will work for an even fairer budget next year,” he said.
“The Greens have also secured a firm commitment from the government to review the health levy in that time, with a focus on fairer, alternative tax measures that don’t directly impact everyday Canberrans.”
Canberra Business Chamber CEO Greg Harford says the payroll tax rise will hurt the ACT. Photo: Michelle Kroll.
Canberra Business Chamber chief executive Greg Harford said the levy deal sent the wrong signals to the business community across Australia and the world.
“The signals are deeply problematic for Canberra’s future,” he said. “The next-highest payroll tax rate around the country is 6.1 per cent, meaning that for large businesses we will be 30 per cent less competitive than the next highest-taxing state.”
Mr Harford said that while only a relatively small number of businesses would be affected, the impact on them would be large.
“It will inevitably mean that increased costs are built into higher prices or that businesses look, over time, to reduce their people in the ACT,” he said.
Mr Harford said the new ”jobs tax” would stifle growth, innovation and competition while encouraging firms to look elsewhere.
“The chamber thinks the ACT Government needs to look very closely at spending across all revenue lines before hiking taxes further,” he said.
“Households and businesses are having to tighten their belts to deal with rising costs – and it’s time the government looked seriously at doing the same.
“Business is not a golden goose that can be indefinitely taxed. Across the government’s total spending of $8.8 billion, there have to be productivity dividends that could save money.”
Canberra Liberals leader Leanne Castley said Canberrans were still stuck with paying a $100 ‘’health tax’’ that breached the principle of universal healthcare, according to Federal Labor Health Minister Mark Butler.
“The Canberra Liberals welcome any reduction in the massive ‘health tax’ that was announced but the fact remains that if ACT Labor had been able to manage the Budget responsibly, we wouldn’t have needed any new taxes,” she said.
Ms Castley said the higher payroll tax rate would mean increased costs and grocery prices, and would affect jobs and investment in the ACT.
The Opposition Leader has now sponsored a petition to repeal the levy.
The government also agreed to review the timing of the Budget and model the Greens’ policy to tax big corporations, for consideration in future budgets.
The health levy was expected to raise $206m over four years to help meet a shortfall in health funding due to increased demand on the system and a falling contribution rate from the Commonwealth.
