Canberra Liberals promise lower annual rate increases for all households if successful at October's ACT election

If successful at October's election, the Canberra Liberals are promising to cap rate increases for all households at 2.2 per cent.  (Supplied: ACT Environment, Planning and Sustainable Development Directorate)

The Canberra Liberals have pledged to lower the cap on annual rate increases in the ACT if they win the territory election later this year.

It's a move the party's leader expects to save the average household hundreds of dollars a year.

Rate increases in the ACT are currently capped at a territory-wide average of 3.75 per cent a year, though the exact increase varies based on the unimproved value of individual parcels of land.

In some suburbs, rates for house owners will increase by an average of 6 per cent in the next financial year, with even higher increases for some unit owners.

The Canberra Liberals have announced, if they win October's ACT election, no ratepayer would see their bill increase by more than 2.2 per cent a year for four years.

Financial 'certainty' promised under a Liberal government

Opposition Leader Elizabeth Lee said the move would provide financial "certainty" for households.

"What we will deliver is a fairer and more transparent rates system which will leave the average Canberra household almost $2,000 better off in the first term of a Canberra Liberals government," Ms Lee said.

"Canberrans have been gouged for the last decade by [Chief Minister] Andrew Barr in relation to [him] pursuing his tax agenda."

Earlier this week, Mr Barr said the current 3.75 per cent cap "has been below inflation now for several years".

The opposition's announcement marks a shift in policy from the last election in 2020, where then-Liberal leader Alistair Coe pledged to freeze residential rates entirely.

Rates the third largest source of revenue for ACT government 

Rates are currently the third largest source of revenue for the ACT government, behind GST receipts and payroll tax.

The ACT is midway through a 20-year transition away from stamp duty towards general rates and land taxes, initiated by Mr Barr in 2012, in his early years as treasurer.

The government has argued its plan will deliver a more stable revenue base to fund government spending.

The current 3.75 per cent cap was introduced in 2021, after years of much steeper increases.

Ms Lee said the opposition's policy would be costed in the lead-up to the election, but it would seek to replace some of the foregone revenue by speeding up land releases for more housing.

"We're looking at how that might offset a lot of the policy decisions that we're making now, including in relation to rates," Ms Lee said.

She said the opposition was also committed to phasing out stamp duty, but would "look at the budget in more detail in government" to plan for how it would achieve that objective.

The opposition has also announced it would move the government's Land Valuations team out of the ACT Revenue Office.