RATING PROBLEMS

Dominion, Volume 21, Issue 240, 11 July 1928, Page 14

RATING PROBLEMS

ANNUAL VALUES AT WANGANUI

INCIDENCE OF TAXATION DISCUSSED (By H.D.8.) To a number of Wellington citizens the result of the poll recently held in , Wanganui on the question of the basis of city rating came as a big surprise. It will be recollected that during the last; week of June the City of Wanganui submitted thte question of the basis of rating—unimproved or annual—to a poll of ratepayers, and a change to the system of rating on annual values was carried by 2413 to 1924. For citizens of Wellington more than ordinary interest is attached to this decision. A couple of years ago the rating question in Wellington was referred, as in the case of Wanganui, to a poll, and unimproved rating won the day. The issue in Wellington was, however, only a partial one, and affected a comparatively small portion of the city's rating powers. The voting was-: For unimproved value, 8169 ; against, 4269 ; informal, 963. The large number of informal votes showed how great was the misunderstanding of the people on the manner in which the issues to be decided were presented to them. .. . • Rating in Wellington until recently was based on the unimproved values in respect of 62 per cent, of the total, producing £267,964. and the balance was levied on the basis of annual values.- The. ’ latter system was used in connection with the rate for hospital and charitable aid; and the water and stree’t lighting, producing £161,344. . . _ It may not be a waste of time to make n review of the different systems of rating in vogue in this country. There are three systems of rating in vogue in New Zealand at present, namely, on the (a) unimproved, (b) capital, and (c) annual values. The two first need no. explana-; tion, but the “annual, values” is not always clearly understood. The system is officially stated as “the value deemed to be the letting value, less 20 per cent, m the ease of 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.” This means that when rating on annual values is adopted in any. borough the ratepayer pays on the let-: ting value as assessed and subject to the deductions stated above, he is taxed on the annual return to him of his Thus a big block of shops or offices would , pay increasingly according to the rents with no regard to the value of the land. ■On the other hand, the unimproved system provides for equal tax on equal land without regard to the nature of the improvements, and alters only with any alteration in the valuation. In Wellington it is eight years since the last valuation was made, and. although in the past six years over £7,000,000 have been spent in buildings, city values have remained constant to. tax on. Both systems have, special features and advantages. Generally, however, it might be said without inviting a controversy that the rating on unimproved values is the only method of any use to any municipality still largely in its developmental stages. Looking at it purely from the point of view of the city administrator, the annual values present the better case. The Treasury draws revenue immediately at the point in time when the occupier himself commences to enjoy what the city rates in turn give him. One helps the other. There is no need to wait for periodical revaluations for an increase in municipal revenue. As you build or improve so you pay, and a real existing difficulty is thereby adequately met. . On the other hand, the exponents of. rating "on land values urge many strong points, the first and most favoured being ; perhaps, why should a man who spends capital in development pay more than he who does not? Again, the man who spends is the man who makes the unearned increment for the nou-builder and the absentee. And there is also that school who say that all taxes should be levied on laud alone. , . ( Whatever the merits, it is recorded 1 that 74 out of 118 of Nev Zealand boroughs levy on the unimproved basis. The fortunes of the system of rating on unimproved values have iicg been free of disturbances in the history of municipal government. During 25 rears, up to 1925. no fewer than 220 polls were taken fw its adoption and 19 for its rejection. Adoption won on 171 occasions out of 220 polls, and rejection lost in 15 out of the-19 tests made under that heading. Wanganui now comes forward and adds a shining star to the constellation of the minority. Accepting the sister city as the home*bf an enlightened community, one is tempted to ask whether or not the last Wellington poll was in fact altogether , free of the influence due to the confusion previously referred to.