LAND VALUES

Evening Post, Volume CXXIV, Issue 14, 16 July 1937, Page 17

LAND VALUES

IMPROVEMENTS TAX

FARMERS' COMPLAINT

A remit asking that the system of valuations, should be amended to provide a more equitable system of arriving at the unimproved value for land tax purposes received strong support from the annual conference of the New Zealand Farmers' Union yesterday afternoon. Delegates to the conference said that the present system of valuing added improvements to the unimproved value and consequently land owners had to pay taxes because they had improved their land.

Mr. R. O. Montgomerie (Wanganui) said that it was quite apparent that the selling value of land formed the basis of Government valuations, but such a practice was justified only if such bona'flde land sales could be justified from a profit-earning- point of view. Land tax was levied on unimproved value and not capital value. Consequently the higher the unimproved value the greater the return from the tax.

"It we examine our Government valuations of improvements," he said, "and realise that perhaps on the bulk of our farming lands which have been bush-felled or its equivalent the cost of that bush-felling at today's prices for such work would comprise considerably more than . half of such valuation of improvements, it leaves very little room for such major improvement costs as fencing, grassing, buildings, and to a lesser degree the thousand and one necessary minor improvements which must be effected to make ff given piece of land a:i efficient farming unit. The question at once emerges: At what stage in the money cost of such improvements does the present system base its improved value? ' "These costs of development have for 20 years been almost double—in many cases more than double—such previous costs. Further, a very considerable proportion of total cleared land has been brought into production during the last 20 years. 'If the Government basis for bushfelling is 30s per acre, then the individual who has paid 60s immediately loses 30s per acre." "HIGHWAY ROBBERY." A farmer could spend £10 on improving his land, Mr. Montgomerie said, and have that valued at £5 in improvements and £5 unimproved \alue. That was highway robbery. In farming land the farmer had to spend money on fertilisers to replace the annual removal of fertility or the unimproved value would not be maintained. The city dweller paid rates and land tax only, but the farmer had to pay rates, land tax, and an annual manure bill to keep his farm from decreasing in value. No matter what the farmer spent in improving his land he did not get credit for it. When poor land was made into good productive farm lands the unimproved value was increased and the farmer had to pay for the money he had spent improving the land. "If, in approaching the Minister of Finance to protect against the reimposit.ion of the graduated land tax," said Mr. Montgomerie, "the recent deputation had pointed out that the present system of Government valuation of land completely lacked equity and that graduated land tax was levied on unimproved values which did not exist, some results might have been forthcoming." The president (Mr. W. W. Mulholland): You. weren't with us. We tried that, but it didn't work. Several other delegates supported Mr. Montgomerie's arguments, and the remit was carried. VALUE OF IMPROVEMENTS. Discussion on land, values was resumed this morning, when the following remit was considered: —"That when a valuation of land is made for rating purposes and land tax and the carrying capacity of the land has been increased by the application of manure, the value of the manure applied and subdivisional fencing should be capitalised and added to the improvements, not to the unimproved value of. the land." : Mr. J. Livingston (South Hawke's Bay) said the remit was similar to the one carried on the previous day. He had gone into the bush many years ago and had developed land. He had seen land developed on the 33-year rental, and the term lived out. If the settler wanted to continue, or wanted his sons to Continue, into a second term, he had to pay for his own improvements. The settler built up a goodwill and it was filched from him to be added to the unimproved value on which he had to pay rates, rent, and' land tax. The farmer should have the right to sell the goodwill he had created. If a farmer spent £50 a year on his farm to keep it in good heart, that was equivalent to £1000 in improvements. The matter should be taken before the Minister and the whole question of the incidence of taxation gone into. A farmer who manured and subdivided land improved the carrying capacity of his land and so improved its capital, value, Mr. L. Hammond (Wellington) said, but the farmer did not get credit for that. The unimproved value was increased beyond reason and rates and taxes increased accordingly. Mr. H. O. Mellsop (Auckland) said that if a farmer spent £50 a year on manure he would get £100 in increased returns, and consequently he could not claim the full value of the ■■ manure used. ' Mr. R. H. Feisst (Auckland) said s that manure was a maintenance cost > and not a capital cost. It was not a 1 permanent improvement. Apparently the system of valuation was not uni- 1 form, and that was the real cause of complaint, but he did not think the remit would help that. Mr.' A. B. Moore (Auckland) moved that all words after "manure" should be struck out and "any increased value due to the use of manure should be added to improvements and not to the unimproved value of the land," added. Mr. Montgomerie suggested that the a union should go further and press for an overhaul of the whole system of Government valuation. c The remit was carried as amended, c