In their recent article in Policy & Politics, Dr Subba Reddy Yarram, Professor Brian Dollery and Dr Carolyn Tran have examind the impact of a ‘cap’ on property taxes in Victoria.

In principle, the rate caps limit the ability of local councils to raise revenue required to fund their ongoing operations, often in the hope that this will stimulate increased operational efficiency. In the article, they empirically investigated two main questions: What were the short-term impacts of the Fair Go rate capping on different types of municipal expenditure? Did Fair Go rate capping have a differential impact on the different categories of Victorian local councils? Analysis of these questions can shed light how best to frame local government policy tailored to accommodate different categories of local council facing different expenditure constraints.

In order to assess the impact of rate capping on council outlays in local government in Victoria, they analysed changes in expenditure among two categories of local authorities – urban and rural – before and after the imposition of the rate cap. They also investigated this rate cap influence on expenditure by council type while controlling for demographic and other extraneous factors. See the Policy and Politics blog here and the full article here.