Council to drop ‘tenant tax’ after months of deliberation, with consequences to all ratepayers

It began with a letter to investment property owners. From there it sparked petitions and outcry, and dogged council debates on housing matters. Now, after months of deliberation, a controversial proposal by Cairns Regional Council is in the bin.

Cairns Regional Council has dropped its proposal to separately rate investment properties after intense public backlash from property owners and realtors.

A differential rating system on non-principal places of residence, colloquially known as the “tenant tax”, was put on the table after the 2022/23 budget release but did not become widely known until investment property owners received a probing letter from council in November 2022.

Property owners were furious – indignant that they were being targeted for revenue raising in a time of increasing interest rates.

Some began to call it “the thin edge of the wedge”, and expected council to use the measure to justify future rate hikes.

Claire Gawler and Aaron Thomas were furious that their investment property was among those slated for a targeted rate rise from Cairns Council. Picture: Isaac McCarthy

Cairns realtors and sector experts quickly fell in behind the landlords and some described the move as “dumb” in a time of dwindling rental property stock.

Then several councillors denounced it in swift reaction to the outcry.

Division 9 councillor Brett Olds called it “unfair”, Division 5 councillor Amy Eden said it was “not the right fit”, and Division 3 councillor Cathy Zeiger said it was “inequitable”.

Apart from Division 2 councillor Rob Pyne who strongly supported the measure, all other councillors remained on the fence as the council fielded community responses.

Professionals Edge Hill director Billy Gartner created an online petition against, what he called, the Cairns Council's proposed "tenant tax". Picture: Isaac McCarthy

The issue then went silent for some time, although Cr Pyne conceded in January he thought the proposal didn’t have legs.

But News Corp can reveal the matter has been very much at the forefront of councillors minds in the past month, and a decision has been made to drop the measure for the 2023/24 budget.

“This issue goes to the heart of considering who can bear the cost of rate rises,” Cr Pyne said.

“I’ll support this proposal to its death, but I anticipate that death (has come).”

Deputy mayor Terry James said the proposal could be re-adopted by a future council after the 2024 elections.

Division 2 councillor Rob Pyne conceded it was the end of the road for the “tenant tax”. Picture: Isaac McCarthy

He also said the cost to residents of the differential rating system, which was due to earn council $50m over ten years, could now be distributed among the existing rate base.

“It won’t be in this council,” Cr James said.

“The whole pie will now go up by whatever percentage we decide (in the budget).

“A future council could look at this again.”

Division 8 councillor Rhonda Coghlan said public pressure played a role in the outcome, but the decision on how to account for the revenue gap left by the ditched proposal was yet to be concluded.

“There are still lots of options. Whether there will be an even increase (across the rate base), we don’t know that yet,” Cr Coghlan said.

“When there’s backlash, we consider all the comments.”

Division 9 councillor Brett Olds said this was a win for residents.

“Property owners out there are worrying and raising rents now anticipating a big rate increase,” Cr Olds said.

“So I think people need to know now.”

Originally published as Council to drop ‘tenant tax’ after months of deliberation, with consequences to all ratepayers