PROPERTY TAX ON IMPROVEMENTS.

Hawke's Bay Herald, Volume XXII, Issue 7822, 15 August 1887, Page 3

PROPERTY TAX ON IMPROVEMENTS.

Mr Sutton still persists in slating that the ?ropcrty tax docs not tnx improvements, would tbereforo like Mr Sutton to answer (straight) the following question, and if he can prove that improvements nro not taxed I will then support him, otherwise I shall favor Mr Tanner : — Supposing v ninn with a largo family bought years ago a farm of 200 acres for £200, tho Ifind being in its natural state, and say that that man and his family by working hard for years, putting all their annual returns in improvements, have by so doing made the present value of that farm to be worth £1000, whatwould be theproporty tax assessment less 10 per cent? Would tho farm bo assessed at £200 or at £1000? Of course at £1000. Can Mr Sutton say that that is not taxing improvements caused by years | of industry 1 I say it is, and if Mr Sutton says no, let him explain. Silt, — Your correspondent asks for information, and I feel great pleasure in giving it. The question is put in a somewhat complicated form. There is no doubt a great deal of misconception as to the operation of the Act. I cannot fancy any case where it is possible to say that an exact amount named is charged as property tax upon any one property. I think your correspondent confuses" property tax valuations with property tax assessment. I do hold most decidedly that improvements are not taxed. My friend is apparently speaking of a ease when the only property held by a person had in consequence of many years' labor upon it increased in value' from £200 to £4000. It may be that such a pase can exist, but I cannot fancy that the matter if fully stated. I n order to arrive at a correct conclusion we must suppose that at the commencement this person had no debts owing by him or any other properties belonging to him, anil that at the end of the time he be in the same position. This I think it will be seen is next to impossible. His property, if valued by the department at £4000, would be put in the ordinary course as of the taxable value of £3500 if he had

no other assets or liabilities. The property tax valuations aro simj)ly fractions of si calculation to enable the commissioner to decide what each man is worth after Iris debts are deducted, and it by no means follows that a valuation of £4000 justifies a claim for anything like that amount. We will suppose that five years have passed since the land which is now worth £4000 was of the value of £200, and that the increase is value in consequent upon improvements by the owner and his family, if instead of improving their land their united energies were directed to some other business it might naturally be considered that at the emlof five yearsotlier property would have been obtained which would lie taxable, my friend will, I think, see that the case put is scarcely a fair one. Property-tax valuations are used by local bodies as a basis upon which they levy their rates, and in that case the rates are paid upon the full valuation. In the matter of local rates the improving settler is undoubtedly paying more in consen^ncp of improved values, but I do not gather that the objection extends to local rates, If ray friend will look at his last

properly tax return he will probably find that on one side he showed in detail everything he nominally owns, and on the other .side all debts duo by him. These last are deducted from the value of hi.s assets, and it is upon the residue tluih arrived at, less £500, that his property tax is charged. Many poisons think that merchants' stocks are charged property tax. This is quite illusory ; they are valued periodically, but they represent only one item of a calculation. The merchant 15 not chargad upon the value of his stock ; he is charged upon the amount the Property Tax Commissioner says he is worth after his debts are paid. I think if my friend will go more fully into the matter he will see that improvements are not taxed. If the commissioner from information supplied considers that any man is fairly worth £4000 he taxes £3500 of it. He does not do so because he owns a property of that valne, but he says that the department finds you can pay your own dabts and have £4000 left. I cannot fancy a fairer bas-is for taxation. It is quite open to argument as to whether it. should be at an increasing rate over certain amounts, but I think it must be admitted that there is much more tairnass in the property tax than in any other form of taxation. If my friend would like any further information I shall be happy to do my best to make more clear what I believe to be an absolute fact, — that the property tax does not tax improvements. — 1 am, &c, V. Surrox. Royston, August 13, ISB7.