RATING SYSTEMS.

Press, Volume LXVI, Issue 19918, 3 May 1930, Page 14

RATING SYSTEMS.

UNIMPROVED VALUE DISCREDITED.

OPINIONS OF FORMER CITY TREASURER.

After 281 years in the service of the Christchurch City Council, working always under the system of rating on unimproved values, Mr James Anderson, the retiring City Treasurer, is convinced that this system is a bad one and should be replaced by rating either on annual or on capital values. Bating by annual value is the best, he claims, if yearly valuations can be made. During a talk with a reporter of Tub Pkesß yesterdav Mr Anderson said that before the amalgamation in 1903 with St. Albans, Sydenham, and Linwood, Christchurch rated on annual value. Linwood had rated on capital value, but the year Mr Anderson became Town Clerk at Linwood the system was changed to unimproved value. "And wasn't there a roar!" said Mr Anderson. "I arrived there just in time to get all the bricks. The people said that the rates would be less, and they proved to be greater."

Inequality of Unimproved Value. After the amalgamation of the four Councils, the unimproved value system was used and has been used ever since. "I have always been a strong opponent of unimproved value rating," remarked Mr Anderson. "It means that whatever improvements are made to a property the rates increase only with the value of the land." He instanced the case of St. Albans, between Colombo street and North Richmond, which, before the amalgamation, was simply an area of paddocks without houses.' Later it was cut up; houses were built on the land, and with the houses came streets and innumerable services. Yet, as far as rating was concerned, the increase in value of each property in this area was only the increase in the value of the land on which it stood. The land certainly increased in value, but not in the proportion that it should have done. By the principle of unimproved value rating, the man with a house valued at £SOOO and his next-door neighbour with a small cottage on the same area of land paid the same rates. Actually, in Christchurch, the system did not work out as simply as this, for although the City Council rates were on unimproved value, the Christchurch Drainage Board, the Waimakariri River Trust, and the North Canterbury Hospital Board rated on capital value, the water rate was levied on annual value, ana the Fire Board's rate on the value of buildings.

Annual Value DofltmL In the Local Authorities' Handbook the annual value is defined as "the letting value, less 20 per cent, in houses, buildings, and other perishable property, and 10 per cent, of land, but in no case is the rateable value to be less than 5 per cent, of the value of the fee-simple." Capital value is "the sum which the owner's estate or interest therein, if unencumbered by any charge or mortgage thereon, might be expected to realise at. the time of valuation if offered for sale on such reasonable terms and conditions as a bona fide seller might be expected to require." Mr Anderson considered either of these valuei a fairer basis for rating than unimprovied value, Whichbrought with it many anomalies and inequalities. . . If valuations could be made annually, then annual value rating was the better system of the two. But in cases where the valuation could not be made yearly, and the annual values were taken at 6 per cent, of the capital value, the system was not so good. Mr Anderson has worked out the figures for Dunedin, where the annual value system is used, and he that the estimation at 6 per cent, on capital value would result in a loss of about & 200,000. "Mr H. G. Ell was the father of rating by unimproved value," Mr Anderson remarked. "He was then a Member of Parliament. The system is all right in a farming community, where just the land is worked and there are no buildings, but where there are buildings of such different values and characters as there are in a city the Bystem is not suitable."

City Contrpls Valuations. Another advantage of annual value rating was that the City Council had charge of the valuing, and made the valuations each year. Property-owners and the City as a whole did not have to wait for an increased valuation for seven or eight years, as under the present Government system. The work of annual valuation would not be very great, and the striking of all rates on one basis would mean a decrease in the other work of the Council departments. As an indication of the present difficulty, Mr Anderson remarked that at present there were forty areas where the special rates were : different. In Papanui alone there were eight different rating areas, many of these overlapping. "They used to keep the different rates in difffferent rate-books, but if they did that now they would need double the present staff," he said. "In the treasury we have only known once a year how much we have collected for each purpose. The rates are collected as a whole and divided up afterwards." Mr J. A. Flesher is another prominent advocate, of rating by ■ annual value.