UNIMPROVED RATING SYSTEM EXPOSED

Evening Star, Issue 21820, 8 September 1934, Page 3

UNIMPROVED RATING SYSTEM EXPOSED

IMPORTANT STATEMENT BY CITY COUNCILLORS The following statement lias been handed to us by eight membcis a -majority—of the Cit3 r Council: As the proposal to alter the present system of rating on annual value to that of rating on unimproved value is being advocated by His Worship the Mayor and Cr Silvcrstone, there is a danger that silence of other members of the City Council on the subject may be construed by the public as due either to a tacit agreement with these views or alternatively that they had no lead to give thinking ratepayers on the duty which will face them on Tuesday next. UNIMPROVED RATING WILL NOT STAND THE TEST. The adv'ocates of the system have postulated two well-established principles by which a rating system should be judged: 1. Payment for services rendered. 2. Ability to pay. They claim that under the proposed cha'nge the central area will relieve the suburbs of rates to the extent of £20,000 per annum. Under the present rating system the central area is contributing 62.61 per cent, of rates, and the remaining area 47.39 per cent. The maintenance vote of the Works Department for the current year is divided as f0110w5:—45.44 per cent, td the central area and 54.56 per cent, to the remaining area. From the foregoing it is obvious that on the basis of payment for services rendered the central area pays already more than it should towards the city maintenance, for, while it contributes 52-61 per cent, of the rates, it receives only 45.44 per cent, of works expenditure. The addition of £20,000 in rates would impose on the central area a further levy out of all proportion, judged by the principle of just payment for services rendered. On the test of ability to pay, the central area cannot be taken “en bloc.” It -would be necessary to examine each case individually before an answer could be given, but as a principle it must be conceded that it is more equitable to rate on the value of the land plus the buildings than merely on land only. EFFECT ON BUILDING. It is claimed by its advocates that rating on unimproved values will bring relief to the unemployment problem by improvements to existing buildings and that the erection of new buildings will be encouraged. As Christchurch is so frequently quoted as an example of benefits of the system (although that city is really rated on four different systems combined), we quote the value of permits issued for new buildings, and alterations and additions to existing buildings in that city, for the year ended March 31, 1933 compared with Dunedin:— Christchurch £130,826 . Dunedin £137,065 Dunedin under annual value rating, with a smaller population, spent last year more in’ buildings than Christchurch under (partial) unimproved s value rating. LEADS TO CONGESTED AREAS. Rating on unimproved values certainly tends to the creation of “ pocket handkerchief” sections and the elimination, of gardens. Advocates have airily dismissed this objection, stating the city has merely to increase the minimum area which may legally be used as ‘ residential sites. This is impressive enough in theory, but, under a system in which an owner is taxed on every square inch of land irrespective of what he puts on it, the tendency is for the minimum to become the maximum. The building of tenement houses, always an undesirable feature in congested areas, appears an easy solution, to the burden of rates under the unimproved system. MISLEADING FIGURES. We are being told that certain suburban areas will save varying large sums per year by the change. No one has yet attempted to show how these results are reached, but it is presumed that the out-of-date figures in the Year Book issued by the Government have been taken as a basis of calculation. They are fourteen years old, and worthless for such a purpose, because entirely new valuations will be made throughout Dunedin, and the old roll will definitely not be used. Calculations of land values and rates based on such values are entirely misleading. GROWTH OF POPULATION. Figures have been quoted showing the increase in the population of Auckland, Wellington, Christchurch, and Dunedin during the past 30 years, and the inference is drawn that the slower growth of Dunedin has been the result of rating on annual value. Auckland, which heads' the list with an increase of 153 per cent., is rated under the same system as Dunedin, which is the lowest on the list. > Obviously the growth of poulation is due, to factors other than the rating system. CHRISTCHURCH NOT WHOLLY ON UNIMPROVED. Christchurch has been quoted as an example to the benefit of rating on unimproved value. As a matter of fact, only about half Christchurch rates are struck on this system. The balance is struck partly on annual value, partly on capital value, and partly on the value' of the improvements only. As a result of this compromise Christchurch ratepayers do not suffer the full baneful effects of the system advocated. It is in large measure mitigated by the combinations of the other systems. Nearer our doors, one hears of many cases demonstrating how inequitably the system works in St. Hilda. INFLEXIBILITY OF UNIMPROVED SYSTEM. One of the drawbacks of the proposed system is the relatively stationary nature of the totalrateable valuation. The city’s valuation roll is at present compiled each year. , Any change in the values, either up _or down is recorded. When new buildings are erected, the full advantage accrues to the city almost immediately. This is in striking contrast to the unimproved system, where a complete revaluation is made by the Valuer-gen-eral every five or seven years, and •sometimes not then, as instanced in, our own case, which has not been revalued since 1920-21. Each new building erected imposes an additional burden on the city treasury in the added cost of services rendered—water supply, sewerage, removal of refuse, street improvements, and lighting.

Normally, under the annual value system the increase in rateable property in the shape of new buildings, etc., is sufficient to provide for tho increased services required as a result; but under tho unimproved system, the total valuation will be practically stationary between Government valuations, with the result that the only, other way of providing for the increased cost is by advancing the basic rate on all property. DANGER OF' TAXING SMALL FARMS OUT OF EXISTENCE. 'The inherent weakness of the proposed system is further exemplified by the fact that in 1932 Parliament found it necessary to pass an Act called the Urban Farm Lands Rating Act. The reason for this was that in many cities and boroughs there were certain areas used for agricultural purposes. Rates on unimproved values threatened to tax these farms out of existence. The Act was brought into being to counteract in some measure the baneful results of the system. To buttress an inequitable system a special Act of Parliament was required to release farms of three acres or more from the disastrously heavy rating. Wo, the undersigned councillors, therefore desire to dissociate ourselves entirely from the unimproved value agitation. After a careful perusal of available reports, data, and statistics, and an examination of the probable effect of the unimproved system on widely divergent types of properties in different parts of Dunedin, it is our considered opinion that the unimproved rating system contains more natural and inherent injustices than any system of rating yet devised. ' Councillors A. H. Allen. .Tames J. Marlow. W. Begg. John L. MTndoi:.W. H. Bohrie. W. A. Scott. H. C. Campbell. W. H. Shepherd.