Investigation of Local Body Taxation

Manawatu Times, Volume 66, Issue 102, 1 May 1941, Page 9

Investigation of Local Body Taxation

NOTED CANADIAN VISITOR WELLINGTON, April 29. Investigating New Zealand’s system of municipal taxation on behalf of the International Research Committee ou Real Estate Taxation, the committee’s director of research, Mr. H. Bronson Cowan, of Peterborough, Ontario, Canada, is now in Wellington. The committee aims through a field of study in New Zealand, Australia and South Africa to gain first-hand information from public officials, business and civic groups as to the effect ou municipal administration and economic and social conditions of a policy of partial or total exemption of improvements from municipal taxation and dependence oil site values or ground rents as the principal sources of local revenues. The vicechairman of the committee is Mr. F. C. It. Douglas, M.P., chairman of the finance committee of the London County Council.

Interviewed to-day, Mr. Cowan said the system of raising municipal revenue. by taxation on unimproved land values was first adopted in New Zealand 40 years ago. To-day 67 per cent, of the urban population of the Dominion lived in municipalities under that system. In the United States of America taxation was based on the capital value of buildings and land and in England it was based largely on tho rental value. In effect there was not much difference between these latter two systems.

The load of municipal taxation, Mr. Cowan said, was heavier on cities in tho United {States and Canada than on

cities in New Zealand because they had to bear the cost of education and law enforcement which here was met by tho central Government. In England the Government gave direct grants to cities to help meet education costs. Growing out of the depression unemployment and the burden of taxation on improvements became so great in the United States and Canada that it was largely instrumental in bringing building industries to a standstill. Few new buildings were erected and existing buildings deteriorated rapidly. Comparatively light taxation on unimproved land encouraged wild speculation. For example, land values in Chicago increased from 2,000,000,000 dollars to 5,000,000,000 dollars between J 923 and 1928 and fell back to 2,000,000,000 dollars by 1933. Nearly 100 banks in Chicago alone failed on that account during the depression. »Since 1930 tens of thousands of buildings in Canada and the. United States had been torn down by their owners to escape taxation on them.