RATING SYSTEMS

Otago Daily Times, Issue 21307, 11 April 1931, Page 5

RATING SYSTEMS

THE UNIMPROVED VALUE “A GRIEVOUS MISTAKE” WARNING TO RATEPAYERS. The following is a memorandum by the Finance Committee of the City Council respecting rating systems:— It was suggested at last meeting of council that the Finance Committee should make some pronouncement regarding the proposed change in the rating system in its application to the city. In the view 1 of your committee the choice of systems is a matter entirely in the hands of the ratepayers themselves to determine, and it would therefore be inadvisable for the council in ite administrative capacity to take sides jn such an issue. We are.led to that opinion from the fact that it is obvious that a change in the system would effect a complete and far-reaching redistribution of the burden of local taxation as between one ratepayer and another. As was pointed out by the town clerk in his report of 1923, such redistribution would not be governed by any of the factors that are recognised as applicable to the established canons regarding the equity of local taxation. The canons or principles mentioned have been stated as:—

1. That every inhabitant of a district should contribute according to his ablity; and 2. That everyone who receives benefit from the local expenditure should contribute in proportion to the benefit he receives.

While the council should refrain from taking sides in the issue it is, however, in our opinion, right and proper that the ratepayers should be warned against accepting at its face value the propaganda now being put forward by the advocates for the change in system. It is being asserted with a confidence that cannot be justified by the facts that this or that district would contribute stated suras less to the city’s budget under the > unimproved value system than these districts are now contributing under the existing system. We have no hesitation whatever in asserting that such figures arc pure conjecture, for the all-sufficient that in the absence of up-to-date valuations compiled under the statutory authority governing the position it is impossible to do more than merely make a rough guess at such results. Under the system sought to be used in the city the valuations are mads by the Government'Valuation Department. The existing figures have not been revised for 10 or 11 years, during which period great fluctuations in property value have been at play, and these fluctuations have been operative to a varying degree in different areas of the district —that is, the advance in value has been much greater in some areas than in others.

It is therefore impossible to forecast what the basic rate would be on a completely revalued city, or for any individual ratepayer to forecast what his contribution to the city’s revenue would be on a valuation 10 or 11 years old. Moreover, while it may be possible to suggest the general trend of the effect of the change as applied to any particular area, it is equally true to say that within each such area the same drastic redistribution of the burden would operate as between individual ratepayers. In other words, it would be a grievous mistake to suppose that in any given area all the ratepayers would contribute less by the change, while in another given area all the ratepayers would contribute more. Furthermore, it would be an equally grievous mistake to suppose that the adoption of the system now advocated is likely to solve the question of local taxation in anything approaching compliance with the canons of “ ability ” and “ benefit ” already referred to. In that connection the most recent evidence of_ dissatisfaction in districts where the unimproved system is in operations is that quoted by the Evening Star of April 8 by way of an extract from “ Board and Council.” The extract reads:—

Polls on proposals to forsake unimproved value rating in favour of ratihg on capital values were taken last week by two local bodies in the vicinity of Auckland —Mount Roskill Road Board and Otahuhu Borough Council. The proposal in each instance was defeated. 0 live similar polls held in recent months three have favoured. a return to the former rating on capital value and two have favoured leaving the unimproved

system unaltered. In this connection the significance to be noted is the dissatisfaction in the five areas where the unimproved system is now operating, rather than the fact that a majority ot the polls resulted against the system, after a trial of it. It is pertinent here to remark that the equitable application of a rating system as between one ratepayer, and another cannot of necessitf find expression in a majority vote of the ratepayers of any district. The real measure of injustice arising from any system quite conceivably may be very much in evidence despite the fact that such a system is imposed upon the area by a majority vote. In districts where the system of . unimproved value rating prevails many such instances have been cited.

In conclusion, your committee would remind council and the ratepayers generally that on October 9, 1929, council passed a resolution in the terras following: “ That the Government be urged to set up a commission for the purpose of investigating the whole question of the incidence of local body taxation.” During the present session of Parliament the Prime Minister has notified that it was intended to sat up a commission to do precisely what the council’s resolution urged should be done. It cannot, therefore, be said that the Dunedin City Council has made no endeavour to have the very complex subject of local taxation investigated with a view to the initiation of a system more scientifically devised in accord with the established canons of “ ability ” and “ benefit ” than any one of the three systems now on the Statute Books of the Dominion. The memorandum will be placed before the City Council at its meeting on Wednesday night. PETITION FOR POLL. The report of the Finance Committee to come before the City Council on Wednesday night will contain the following clause:— A petition praying that a poll bo taken on a proposal to adopt the system of rating on unimproved values in the city was received on the Bth inst., and is now being checked with the object of ascertaining if the petition complies with the provisions of section 40 of the Rating Act, 1925. If the petition is found to comply with the Act a poll of the ratepayers on the proposal would be taken on May 6 simultaneously with the local elections on that date. Following on the references at last meeting of the council on the above subject, your committee has now prepared a memorandum on the rating question, and copies thereof are being sent to each member of council with this agenda.