THE PROPOSED POLL

Evening Post, Volume CXIII, Issue 86, 12 April 1927, Page 11

THE PROPOSED POLL

COUNCILLOR LUCKIE REPLIES

TO CRITICISM

(To the Editor.)

Sir,—ln your issue of the Cth iust.. Mr. O'Regan takes'me to task for my remarks in a speech reported in the previous day's paper on the question of rating, and quotes Adam Smith (whom, I think, ho incorrectly refers to as the founder of the science of Political Economy) iv. support of his views.

I do not profess to bo such a student of Adam Sniith,'or perhaps of Political Economy as Mr. O.'Regan, but Adam Smith wrote tho book from which Mr. O'Regan quotes more than 150 yars ago; and is it not remarkable thatj with the possible exception of Glasgow to which Mr. O'Regan refers, there is no great municipality in Great Britain that derives its revenue by rating on the unimproved value; on the contrary, they all rate on the annual valuel

If I am correct qr approximately correct in these statements Adam Smith's teachings have not borne much fruit in the Old Country. Mr. O'Regan cannot deny, and has not at any time attempted to deny the statements which I have repeatedly made-^-that by rating on unimproved value tho capitalists of this city, particularly in the business area, are escaping taxation which is thereby automatically thrown on the small residential occupier of his own property, especially when it is borne in mind that under a system of rating on the annual value the owners of the big business blocks in the city would be assessed at an annual value equivalent to 80 per cent, of tho rents they actually receive,, which is not less than from 12 per cent, to 15 per cent, of tho gross Government capital value of their property, instead of as they are at present on ti per cent, of the unimproved value only. Mr. o'Began questions my statement that Wellington has been overbuilt, and its ■ gardens destroyed. Had Mr. O'Regan enjoyed my exp'erieneo .during the last 14 years on the City Council he would have known that the council is constantly faced with applications for subdivisions of residential properties into the minimum area allowed by law, and tho experience of anyone who has watched tho development and growth of the city during tho last 15 or 20 years, bears out my statement. The Rating on Unimproved Value Act was made applicable to "Wellington over five and twenty years ago, because of the large areas of vacant land which then existed in the city, and which were owned by absentees, ■the city having been 1 colonised and de-. veloped by a limited liability company in England, every shareholder in which was entitled by ballot to a section in the city, and scarcely half of whom ever intended to bo colonists.

The system was inaugurated solely as an expedient to compel building on these sections or the disposal of them by their owners to someone who would build, and that was its only justification. It has long since effected its purpose, and to such an extent that the residential portion of tho City of Wellington is divided into smaller areas with fewer gardens than is tho case of "any oth,er city in tho Dominion, and in the business area thero aro no vacant sections at all. Tho chief benefit of tho system is being reaped by the owifcrs of tho business areas in the city.

Mr. o'Regan questions my statement Hiat the- effect of'rating on unimproved value as contrasted withrating on annual value is to relieve the owners of oxpensivo buildings in the business areas, at the expense of the suburban areas. I. reiterate that statement... <Vt .present the owners of theso promises, in so far as they are rated on tho unimproved value arc charged G per font, on that value, whereas if they were rated on the annual value, the annual valuo would bo fixed at 80 per cent, of the rents they-are actually receiving, which would then be not less than 10 per cent, on tho total capital value. Naturally, therefore, tho owners of the big business premises are desirous of seeing the extension of. the system of rating on tho unimproved value. Hence Mr. O'Began was accompanied, ■when he presented his petition, by the manager of tho Huddart-Parker Co., Ltd., whose new building on Jervois quay will materially benefit by having its rates reduced in common with all similarly-situated business promises in the city. Ana hero wo have the most unusual spectacle of the Labour Party and Mr. o'Began being associated with the big business interests of tho city, who are at present escaping their due share of municipal taxation as a result of rating on the unimproved value! When it is borne in mind that in the last two years the city has granted building permit's for over four million pounds' worth of new buildings, nearly three millions of which are for business purposes only, all of which are escaping taxation, and tho rental value of which is not less than £.300,000 per annum, it is not difficult to see to what an extent "big business" -will benefit by the system of rating on the unimproved value.

lam glad to be ia a position to accept Mr. O'Regan's challenge to produce figures as to . the effect of his proposal. I have in. my possession a typical return prepared about a year ago by the municipal authorities, showing tho effect on the rates that will be paid in respect of various properties in the city if Mr. O'Eegan's proposal is carried. I shall bo glad to givo Mr. O'Began access to this, return whenever he wishes to see it.

It shows clearly and distinctly Hint as far as the. "old city" is concerned, in the great majority of cases, particularly iii the case of tho small cottages' situated in Thorndon, Te Ai-o, and JN Tewtown, the rates will bo increased materially, and tho henviest increase will fall upon the owners or occupiers of the smallest dwellings. It ia, therefore, going to hit hardest the labouring people who live in these districts, whether they own or only occupy the properties, because the increase will be passed on by the landlords to the tenants.

As a general thing the only people •who will at present benefit by Mr. O 'Regan's proposal are those in the outlying portions of the city—from which I venture to suggest Mr. O 'Regan gut most of his signatures— the Government unimproved values of whose properties vary from £100 to £300 or £400, and then only chiefly in favour of the owners of tho most valuable buildings erected thereon. The poor working man whose cottage on such a section has only cost him a small amount of money will get no benefit, while the benefit will go into the pockets of the wealthy man who' has built a big house.

Even in this case it is to be pointed out that the values upon which the present figures aro supplied are the Government valuations of 1021, and as it is the newly-settled outlying districts that the .moat rapid percentage of increase in the unimproved values will tako place when/tho new valuations (which are now a year overdue) are made, probably in 1928, the owners of these properties can easily see thut the Government unimproved value will be increased in most cases by from 00 por cent, to 100 per cent, (while the annual value will remain the same owing to depreciation of buildings), and in. the event of Mr. O'Regan's proposal being carried tlieir rates will go up in exact proportion to such increase, and all, for the benefit of the big buainess blocks in the city.

It may interest your readers to know

that when tha Borough of Grey Lynn amalgamated with the City of Auckland in July, 1914, it was on the understanding that the system of rating on unimproved value then in operation in that borough should continue for seven years after amalgamation. The seven years expired in 1921, after which the system of rating on annual value,' in conformity with the remainder of the city, was adopted. No demur has-been made sinco this by the 'residents of Grey Lynn, and the affairs of the district have prospered materially. Previous to amalgamation with the city the Grey Lynn suburb was one of tha strongholds of unimproved value. In conclusion, may I state that it is generally admitted that a properly-re-gulated income tax requiring from each individual member of the community a contribution to the expenses of government in exact accordance with his means, is the fair and most correct method of raising revenue for a Government; ' and rating on the annual value is to a city, which cannot deal with the person but only with the property, exactly what income tax is to the individual.—l am, etc., MARTIN LUCKIE.

11th April