RATING SYSTEM

Evening Post, Volume CXII, Issue 135, 4 December 1926, Page 32

RATING SYSTEM

(To the Editor.)

Sir, —I will leave tho scientific ni(lo of dispute between Councillor Lu'ckic and Mr. o'Regan to those gentlemen. Now, I don't own any land in Wellington and very littlo elsewhere, but I havo made a living almost exclusively for over twenty years by land dealing, and claim that practical experience is worth a whole lot oi' theory. It was through the introduction of the so-called rating on unimproved value that I put aside my useful occupation to follow that oi' which Mr. O'Regan would no doubt call that of a social parasite. And this is the way it occurred: I was living in a small town when Mr. O 'Regan and a friend came along and persuaded the majority of

the townsfolk of the marvellous things they would get for . nothing if they would only adopt the system he advocated. To the horror of many of my friends—for I was a prominent/Radical at that time —I took the platform against thp measure. I was so badgered about the fallacy of my' arguments that I declared that if the proposal was carried I would abandon my then occupation of real producer and make more money out of -land speculation, which it was said this measure would prevent, than I possibly could out of my useful occupation. I think I may here say without fear of contradiction that since the advent of the measure a very healthy crop of agents, speculators, and farmers have made much money but >'of - land speculation, and so far must admit tha/t the Act has failed in its main object. On referring to the notes of my speech I can find nothing to retract from what I said at that time. ! I contended that by reason of the large riji in rates the poor man would either have to sell at once or borrow money to build, that there would be for a time a boom, that the wealthy man would sit back for, say, two years or so, then sell at double tho price by.reason of the poorer man borrowing money and building. I. am sure anyon^, who thinks back a little will agree with me that this did happen, and I speculated on it and did it myself many times over,; I also contended that it would crowd people 'closer in localities in and handy to tho towns, and I don't think even Mr. o'Regan will deny that it has. Perhaps he thinks a pocket handkerchief backyard quite a sufficient one in which to rear a family. Well, I do not, and I further think it one of the reasons why there are not so many families to rear these days. I also contended that the system would divert large sums of money from investment' in the country and raise the rate of interest to farmers. I think I can fairly claim that this part of my prophecy has also been fulfilled. I know the consequences, and I thinK all reasonable minded people do also.

I claimed also that /it would lure many of our brightest and best lads from the country to the more attractive city life, much to'the detriment of the lads and the country, and finally I claimed that, so far as easing the man's rates who had built a house or spent money on his section, that tho better house he built the more he would have to pay. To prove this I subdivided sonM land and sold the sections to selected clients, who built good houses, when, much to their astonishment, their rates were trebled. I also saw this same things happen in at least five towns in "the North Island and. one in the South Island, arid had I the elastic conscience of some reformers I would have joined the league and assisted a few more ','mugs" to fall in.

Now, if Mr. o'Began does not know of these happenings it is because he is only a theorist and not practical. They are also patent to everyone with the experience of things as they aro that'l fancy I can see Mr. O'Regan with his tongue in his cheek occasionally. Mr. O'Regan may pertinently ask whether I think a man should reap all the benefits of his neighbour's expenditure. Well, I tlo not. My remedy is to make him pay a fair proportion of his net profit to the city or country funds every time ho makes a profit. Mr. o'Regan may also ask what sort of a place I think New Zealand would have been had not tho system he advocates been in vogue, and my reply is that it would have been much more like the good old country that Cobbett tried to make England, that Ireland has so long struggled to maintain, and that Henry Ford is to-day trying to make the United States; that is, give every man a chance to work and till the soil, even if it is only an acre or so. It is the natural right of every man. It is the only way that any nation was ever made great, and you cannot build a healthy moral population by taxing every inch of land so high that tho people are compolled to livo herded together like sardines in a tin. To think that an Irishman is the leader of a movement is perhaps the most astonishing, thing about it. Had tho scheme been concocted by someone wishing.tho nation a great injury ho could not havo proposed anything worse flian the rating on Unimproved Values Act. —I am, etc.,

NEW ZEALANDER.

(To !ha Editor.)

Sir, —To tho average ratepayer like myself there does not appear-, to be much difference in tho rtsnlt of ono system of rating and another. The effect, Ijtiwevor, of tho unimproved system and that of the annual value may be different. Tho result is that tho City Council requires a certain amount of money in order to carry on the administration and tho necessary works of the city. Tho complaint on the one side is that the revenuo is not adequate, tho valuations made aro at too long intervals, and that tho revenue does not increase with tho growth of the city and is not automatic in its inci'cases.

All those objections to the existing system aro in the hands of the city for remedy. To the first, the

council has tlio power to increase the rules. .It do«H not wish to do that because mi incrciuto in rates is a direct appeal to ratepayers' packets and leads rutepnyors to ocrutiniso and criticise tlio expomlittiro of the council. Generally ratepayers are not satisfied, that tho expenditure of their money by the council has been an prudent and as economical as it ought to havo been; and more money obtained automatically would not ine'luco to greater prudence or economy. It will bo generally agreed that valuations arc made at too long intervals, and tlio City Council is not blameless in that it has not sought power by Act of Parliament to enable it to institute a valuation department of its own and make its valuations overy two or threo years. As to the other reason, it can be shown that the rates havo increased under the present system enormously. Tho rates collected during 1917 were less than half of the amount collected in 1925. In nine years the rates havo more than doubled. If we include tho rates for this year (192U) wo iind that the increase in the annual rates collected amounts a3 between 1918 and 1926 to no less a sum than £191,194. That increase is greater that the total rates collected in 1918. Tho point is this': rating on tho unimproved value doea not prevent •an increased demand upon the resources of ratepayers; and it does not provent tho council doubling its revenue from rates alone inside of nine years* A change in the system of taxation is not necessary on these grounds.

Those who seek a .change,. however, mainly aim at the taxation of largo buildings and other annual rental value. The unimproved value purports to tax only increased ground values. .Apart from the principles that govern all systems of taxation all notable economists are agreed that the community added value is the most legitimate object of taxation. What is community added value! A man buys a section in- Willis street twenty years ago at £100 per foot; to-day, the builds ings being the same, the selling value is, say, £300' .per. .foot. £200 per foot is the increase.in the. unimproved value. That is community added value. And that is held by all advanced economists to be the legitimate object ojf: taxation. But it is proposed that the expenditure of the individual's capital (which is saved labour) should be taxed annually. That is not sound as an economic principle. ' The man has spent, we will say, £20,000 c buildings. That has. gone back into trade and labour, in material and wages. That is not so fair or reasonable an object of taxation as the unimproved value. Such a system of taxation, would be a tax upon thrift .and enterprise, and without' these virtues or qualities no city could be built. Again, the exercise of thrift and enterprise in a community without hindrance must add to the : unimproved value of all property and city rates must, until a cityceasea to grow arid develop increase automatically under the existing rates system: Witness the double rates' revenue- in Wellington inside of nine years. Every ratepayer will consider how the proposed alteration is going „to affect himself. Here the principle of taxation is considered. My view is '.that the .: community added value is a legitimate object of taxation, and 'that taxation ! upon expenditure.of capital spent with the merchant, and the worker is not so legitimate. an object because that is calculated to' retard development by thrift and enterprise.—l am,, etc., J. D. SIEVWRIG-HT. ' 3rd December.