THE RATING BATTLE

Evening Star, Issue 20780, 30 April 1931, Page 2

THE RATING BATTLE

KEEN INTEREST IN PUBLIC DEBATE DR BOROMAN V. MR SILVERSTONE Great interest was manifested in the debate on the rating question in the Town Hall Concert Chamber last evening. Many had to be turned away, and a packed house heard Dr W. J. Boroman’s championship of the present ■system (the annual or rental value) and Mr Mark Silvcrstonc’s case for rating on unimproved value. Both leaders spoke for a’bout forty minutes, answered questions for half an hour, and finally summed up in a further fifteen minutes. There -were several interjections, but the debate was conducted in an excellent spirit, the audience being an attentive one and according both speakers an impartial hearing. Mr H. Duncan, president of the Dunedin City Ratepayers’ Association, occupied the chair. Ho apologised for the absence of the mayor (Mr It. S. Black), who was engaged at a mooting of the City Council. It was indeed a great pleasure to see such a large attendance, an attendance that spoke well for the citizens, and demonstrated the importance of the rating question. Later in the evening Mr Black was able to be present, lie congratulated the citizens upon the interest they were taking in municipal affairs, and expressed the liope that a record poll would lie made in the forthcoming elections. PRESENT SYSTEM DEFENDED. In opening. Dr Boroman said that ho regarded this meeting as more than a mere debate,, and so would not content himself with simply trying to score petty debating points. lie hoped to deal with the main points of a system which ho honestly believed was far and away the bettor and sounder of the two. In the main, the weakness underlying the single tax schemes was the same as that underlying tho rating on tho unimproved valuation system. 'The baric argument advanced by" single taxers was that tho holders of land invariably gahfed an unearned increment or unproductive earned increment; and, secondly, that land was the only factor which enjoyed an unearned increment or unproductive surplus. This, it was claimed, was sufilcient reason for subjecting the holders of land to all taxation. Modern authorities on public finance had proved that tho whole fabric of this argument was riddled with fallacies. ■lt was absolutely wrong to speak as if unearned increment escaped taxation under tho present system. If a city council, for instance, built, a new tramway, this expenditure out of rates was reflected in a subsequent valuation.

The rliiim for basing the whole rf rates on the value at land alone was ns unsound in theory as it would ho unjust in practice. The present system in Dunedin was based on ability to pay, and that was a principle which was universally regarded as sound. The nearer any system approached that ideal, the more equitable, fair, and just it was. Tho man of wealth should pay more than tho poor man, but under the unimproved system this was not the primary consideration. Dr Boraman quoted tho case of two men who owned adjoining sections, costing, soy, £.‘!OIJ each. One man earned £),000 a year and he could afford to build a house costing £.'1,000. The other man earned £OOO a year, and ho built a house costing £701) Under the existing system the rates of the rich man would greatly exceed those of the poorer man. Under tho unimproved system both would pay exactly the same rates. Where was the justice in that as a scientific system? A local income tax would bo fairer even than the present system, hut such a tax was administratively impossible. The anomalies under the rental system could nob lie compared with those under the unimproved system. 'file lecturer quoted a letter from a Takapumi dairy farmer which had been read in Parliament hy Mr Adam Hamilton, M.P. This dairy farinci staled that his district had recently carried rating on tho unimproved system and that ho hail got a rale account for £;)S9 on a property which had never returned him more chan £0 per acre gross. Reference was made to a ease quoted by Mr Lew in in his report of 1920. A dwelling (four rooms) on 18.1 polos paid £5 Os .‘id under tho present system; under Die unimproved system it would pay £J£ I As .'id. Where was the justice in penalising this man for not having built a bigger house ihan ho was able to build? Dunedin had grown up under tho present system, and Dierc were hundreds of small homos that stood in the middle of two or three small sections each of nine or ten poles in area. These owners could not snh divide. The root cause of discontent of tho rating was the rapid growth of expenditure and of indebtedness. (Applause.) In the past ten years local body expenditure in Xcw Zealand had jumped from £2.'!,000,000 lo £71,00(1, IJOO, and in a single decade Die total rates collected in Dunedin had more than doubled. This incicasc in rales would have occurred under any system of rating that had over been devised. The steadily increasing burden rf ratefc was due to no peculiarity of a system of _ rating. it was due to causes which would opci-Uo with greater harshness if, by Die adoption of the unimproved system, the basis of assessment was narrowed down. Tho

total amount to bo raised by tho city of Dunedin would be the same whatever system was in force. Certain business linns and people would have their rates reduced while others would line] theirs increased. (“ Hear, hear.”) To some property owners it would mean confiscation of part of their possessions and to tho community as a whole it would bring no gain. * The unimproved system was a leap in tho dark, and so it would be. There were no satisfactory data in existence for working out what the rate in the £ would he under the unimproved system, for tho simple reason that tho Government valuations were out of date.

Tho unimproved system was not based on the ability to pay. Many working people, ho agreed, would gain, but just as many working people would lose. Similarly, many wealthy people would lose, but there would he just as many who would gain under the unimproved system. Dr Boraman said that tho unimproved value system would not cure unemployment. They had the system in other towns in New Zealand, and these towns had more unemployed than they had in Dunedin. Ho gave figures in connecton with the rating of a large building in the city of tho skyscraper type standing on 29.0 poles, and said it now paid £751 7s 13d. Under the unimproved system it would pay £3lO 17s 2d. Ho also gave tho decrease in rates which two Dunedin theatres would pay if the unimproved system were adopted. Ho maintained without fear of contradiction that if the city changed over tho tendency to slum areas would bo greatly increased, do had not referred to anomalies under the present system, for there was not one of them that would not occur under tho 'unimproved value system. The hardships and anomalies he had pointed out were now ones—ones that did not exist at present, but which would be introduced for the first'time in the history of Dunedin. Let him conclude by saying that when Wellington adopted tho unimproved system one.of tho largest and richest firms in Now Zealand was reported to have given £I,OOO to tho single-taxers to help them in their crusade. Ho would sit down now so that tho opposition might explain to thorn what usually.happened when tho lion lay down withHho lamb. (Laughter and loud applause.) THE UNIMPROVED SYSTEM.

” Tho question of rating on unimproved value is essentially an economic one, and no amount of "philosophy or pedantic discussion will convince tho worker who lives in a cottage, who pays £l2 a year under tho present system,, and* who would pay £5 on unimproved rating, that tho present system is good for himself, his wife, or children,” said Mr Silverstono. Dr Boroman had introduced the subject of annual rentals, and had said that it was essentially based on the principle of tho ability to pay. Ho bad wanted the audience to follow Adam Smith, but how far? Only so far as it did not affect the present system. Adam Smith answered some of the arguments Dr Boroman had put forward. He had certainly laid down tho principle of tho ability to pay, but had also explained it. Along with' tho ability to pay entered tho measure of sacrifice. Taking two men, both on £I,OOO per year, one married, ono single. Which made t tho greater sacrifice? Adafn Smith did'not agree with Dr Boroman. He laid down that on the principle of rating on the rental value it was essential for tho tenant and tho landowner to share the burden of rates. Adam Smith did not regard tho unimproved value a.s outrageous as Dr Boroman endeavoured to picture it. If this wore the case, thou 58 per cent, of tho people of Now Zealand must be suffering grave hardships. Adam Smith was quite in favour of rating on unimproved value. Mr Silverstono noted that tho town clerk in his “ famous ” report quoted Adam Smith, but he also stopped at a certain point. Dr Boroman had told them that tho poorer people would bo affected, and that the rates would go ii() under the unimproved avlue. Who would pay them? Would tho working people pay them? A Voice: Sure!

Continuing, Mr .Silvcrstono said that a tax on ground routs or unimproved value would discourage slums and not encourage them. Where were the slums that had grown up in St. KildaP (“Hoar hear.”)- Mr Silvcrstono challenged any advocate of tho present city system to show them any liner suburb iii tho city. That idea was all “ bunkum.” (Laughter.) The audience had been told that the beautiful gardens in tho private properties would go. Where were the beautiful gardens they used to secP They had been built on. How many workers with wages under the income tax lino could aflord to have bountiful gardens on a 40fb frontage? The men who supported Jhat contention did not have a sound argument. There were about 150 workers’ cottages in Dal more, and they paid on the average about £lO or £l2 in rates. How much would they pay on the unimproved value? Dr Boromau knew —bo bail said so. He had told them that both tho ‘ Times ’ and the ‘ Star ’ agreed on this subject. There was nothing in that—it was just a matter oi course. (Laughter.) •‘We are told that wo arc taking a leap in the dark,” continued Mr Silvorstoue. “ Vou will all remember that mothers, when their children used to cry, said: ‘Hush, hush, or tho Black Prince will got you.’ One would think that Dunedin was the first city to try it. Wellington and Christchurch took a ‘leap in the dark,’ and won’t go hack on it.” A voice; How do you know that? “Well, they To not game enough to try it:,” replied Mr Silvcrstono. “Napier and Hastings took a ‘leap in the dark ’ (loud laughter), hut lor all that Napier .will rise greater than

over she was, and wilt not he burdened by a tax on property. Wo aro told that wo will hurt ourselves —there is no fear of Dunedin people hurting themselves. They am far too canny for that. Of the 232 municipal and local body authorities who rate on the unimproved value not one of them has succumbed yet. Much has been made in the Press of the five small boroughs who reverted to t ) old system, but you were not told that in tho thirtytwo polls taken to rescind only twelve were successful.. Dr Boroman says that the position will be just as it was before if tho new, system comes in, and it will come in! (Applause). Do yon know that in Dunedin there are twenty-one oue-roomed houses? And then our friends talk of slums under the unimproved value system!” A voice; ’That’s down in Ravensbournc. (Laughter.) ‘‘There were 130 two-roomed and 585 three-roomed houses,” continued Mr Silverstone. “It is a disgrace to the community and wo call ourselves civilised There are 8,730 workers’ cottages of four and five rooms, and 2,488 of six rooms, tho total of one to six rooms occupied by the working classes being 12,054, a vast majority of the ratepayers. I r y that the unimproved system of rating would reduce tbo burden on those workers’ cottages by one-third. Tho town clerk of Christchurch has said _ that if Dunedin wore rated on unimproved value the rates would bo Is Id in tlw £.. Take a man with a £I,OOO five-roomed house. On the ground value of £IOO for rating purposes the rates would he £5 8s 4d under the unimproved value. Under the present system he would pay £ll. Why go to tho economists P ”

During one year twenty places between George and Frederick streets changed hands for prices totalling £185,000, an average of over £9,000 each. A good many .boro the signs “ Established in 18(33 ” and so on, but what did that signify? The money was paid for land values, and not for the buildings. Lands such as these would have to bear the burden of the rates. The largest amount of money was spent in the centre of the city, and all that they asked was that it should bear its fair share of thq rates. When Mr Lewin prepared his report against unimproved value tho total capital value of tho city, estimated on a rateable value, was £17,500,000. In 1931, taking the last valuation, it was £27,700,000, an increase of over ten millions in eight or nine years. Where did it come from? The total value of new buildings was not quite £5,000,000. The old ones did not improve in value. Mr Silverstono wished to remind his opponent that tho older city lands became the more value they achieved. “ Tho ‘ Star ’ told mo that from 1921 to 1930 has boon a period of rapidly increasing land values,” concluded Mr Silverstone. “ That is just what 1 said, but when i said it it was wrong. When the ‘ Star ’ said it it was right. Alter next Wednesday night, when Dunedin is to be revalued, you will find that I’m right and the ‘ Star ’ is right.” (Laughter.) ‘‘ The appalling ignorance of our editors and the gentlemen opposing ns is sublime.” (Laughter and prolonged applause.) QUESTIONS AND REPLIES.

Numerous questions were handed to the speakers, and after these had been answered both save a final summary of their cases. ])r Boromau said that Mr Silverstone had no grounds for saying that the rates of the working people would be reduced by a third. Ho' quite agreed with Mr Silverstone that people should not be required to live in one-roomed houses, but he did not think the unimproved system would cure tho evil. It had not done so in the past, lie had always admired Mr Silverstone’s subtle powers of evasion, but that night ho had been almost speechless in his admiration. They should remember that there were 524 local bodies, and only 134 per cent., or less than half, were rated on the unimproved system. Tho speaker reiterated his statement that the unimproved system helped to create slums, and slu’d it had done so in Wellington. Ho chaffed Mr Silverstone for having said on various occasions that the unimproved rate in Dunedin would be 7d, (lid, and Is—that was in the short space of one month. That was proof positive that his estimates were all wrong. He had lifted three thimbles, and the pea was not there. (Laughter.) Mr Silverstone said that he knew that ten owners held twenty-live acres of land within five minutes’ distance of the Town Hall, and these people naturally would have to hear a largo burden of the taxation. Dr Roroman had told him that the unimproved rate had increased slum areas in Wellington. How could any man make such a statement in iace of the iaots? Slums were there before unimproved rating was inrodueed, and Dr Roroman could nob deny that. (Applause.) It had been mentioned that the unimproved rate would cure the unemr ploymont problem, hue he would like to know who had put that claim lorward. These things had no hearing on tho questions whatever. (Laughter.) Ho wanted them to look at the question from their individual pockets. If it was going to affect their pockets then they should vote against it, and if it was going to help them then they should vote lor it. If they accepted that advice they would win the poll next Wednesday by two to one. They should vote for their own interests, and after tho system was in operation in Dunedin for a few years it was not likely that the city would ever go back to its bad old way. He wanted to tell them that if they were going to save £5 and to give a little more comfort to their wives and children it would bo bettor than all their sections with

wardens in the world. A happy, contented wife and happy children were worth all the lilies in the world. Let them emulate the action of the workers in other cities which had carried unimproved rating. (Loud applause.) Dr Boroman said that it was not to be supposed that he had a bias against Labour simply because he held a minor position at the University. He would like to add that he agreed with 99 per cent, of the views of Mr Silverstone. He disagreed with him on 1 per cent., and that was on'Mr Silverstone’s views on unimproved rating. (Loud laughter.) Tlie Rev. J. D. Smith then moved a hearty vote of thanks to the speakers. He thought it rather appropriate that, as they were dealing with economics, they should have a “ Silver ”on one side and a Borojiian ” on the other. Amidst loud laughter ho added that he would not likcT to suggest that because of that one was sterling and the other unsound. ‘ . . , The motion was very warmly carried.