RATING ON UNIMPROVED VALUES

New Zealand Times, Volume XLIII, Issue 10135, 25 November 1918, Page 7

RATING ON UNIMPROVED VALUES

(To the Editor "N.Z. Times.") Sir, —A rating poll is to be taken in tho ilanawatu (Journlv <m .'•.Vedn&iday next, and it is to be hoped Unit the friends of rational taxation "will not miss the opportunity to .secure a victory. In this connection way I mention that, of the 13) polfe so far 'taken in this country ,there hare been 29 in counties, of which 20 were successful. Hating on unimproved values has long since passed the theoretical stage, and practical experience has already proved uu-ontestably the soundness of the principle. At first Wight it may appear a matter of trivial importance to exempt improvements -and apportion all the local revenue from the unimproved value of land. Nevertheless the most cursory examination of the principles of taxation will show that there is a fundamental distinction between taxing improvements and taxing that community-created value which attaches to land, and which is generally termed the unimproved value. Improvement* ore necessarily the product of labour. Onco ameliorate the natural condition of land in any way, whether it be by clearing, fencing, draining, building, or otherwise, and tho constant application of labour Jisi rennired to maintain those improvements. It thu's follows that every landowner who makes improvements is a public benefactor, indeed it is impossible for anyone to do that which he luu a right to do without incidentally benefiting his fellows. ' Accordingly tho cncouiragenieut of the utilisation of land is the highest public policy. To tax improvements is necessarily to discourage- tho proper utilisation of land and to retard the "progress of the community. But the matter does not by any means stop here, inasmuch a\s the unimproved value of land is due, not to any individual effort, but to tho collective presence of the people. To tax it does not implv in the smalle.-t degree the penalising of anyone's industry. On the contraTV, it implies the relief of industry and" tho corresponding discoUTagement of mere speculation in land, which bonefits nobodv except the Vpernlator. But it. may be" asked why should we discourage- investment in land? I like tacitword investment! My reply is that there is a. wide distinction between capital invested merely in tying up land and that which is invested in the utilisation ot land. We could do very well without the former altogether. Supposing the land monopolist got out of the country and took his capital with him, leaving lifts land ownerless, the comniuraity would be a positive gainer, for the man who- is a more land monopolist is of no benefit to the community, and his monopoly thereforo is pre-eminently tho proper subject of taxation. With the improving settler, however, the position is very different, as tho slightest consideration of the facts will show. Having regard to the small amount ot revenue which is required for merely local taxation, it would be too much to say that the adoption of rating- on. unimproved values will correct the evil of land monopoly. Nevertheless the system affirms the principlo of taxation which, if carried far enough, will make land monopoly a thing of tho past and will dispose of the evil of aggregation as no fanciful legislation emanating even from a National Government can .ever accomplish. For tho purpose of giving an object lesson, therefore, on sound principles of taxation, it is to be hoped that the ratepayers of the Manawatu County will carry rating on unimproved values, and I have no doubt that if sufficient interest is taken i n the question success is aosured next Wednesday. The time will come whon peoplo will be amassed at the stupidity oT a genera- [ tion ; which tolerated tho taxation of improvements. In the year 1842 there was enacted in New Zealand an ordinance providing fOT a special tax on all buildings having a thatch roof. The object of the measure was set out in the preamble, namely, to discourage the' use of thatching that it enhanced the risk of loss by frre. Because it wished to discourage this particular class of improvement, lie Legislature of the day imposed a, special tax ou all thatch buildings. The ordinance, as tv matter of fact, remained in force until 1878. It was certainly logical, because its framers realised that tho most effeotive wav to discourage improvements is to tax them. By taxing improvements wo in effect treat them as though the proper utilisation of land was something obnoxious. Tho politicians of this country have been very slow to rocogniso the justness of land value taxation, but if wo succeed —as wo ultimately must succeed, in placing all local taxation where it ought to be—perhaps our nublic men will be inspired with sufficient courage to do the right thing with general taxation. V. J. O'KEGAN. November 23rd. 1918.