MUNICIPAL TAXATION

Otago Daily Times, Issue 24594, 30 April 1941, Page 9

MUNICIPAL TAXATION

VISITOR’S STUDY OF DOMINION’S SYSTEM (P.A.) WELLINGTON, Apl. 29. Investigating New Zealand’s system of municipal taxation on behalf of the International Research Committee on 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 and business and civic groups of the effect on municipal administration and economic and social conditions of a policy of partial or total exemption of improvements from municipal taxation and the dependence on site values or ground rents as the principal sources of local revenues. The vice-chairman of the committee is Mr F. C. R. Douglas. M.P., chairman of the Finance Committee of the London County Council. In an interview 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 and to-day 67 ner 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 the rental value. In effect, there was not much difference between these two latter systems. The load of municipal taxation, Mr Cowan said, was heavier on the cities in the United States and Canada than on the cities in New Zealand because they had to bear the cost of education and law enforcement, which here was met by the central Government. In England the Government gave direct grants to the cities to help them to meet education costs. Growing out of the depression and unemployment, the burden of taxation on improvements became so great in the United States and Canada that it was largely instrumental in bringing the building industries to a standstill. Few new buildings were erected, and the existing buildings deteriorated rapidly. Comparatively light taxation on unemproved land encouraged wild speculation. For example, land values in Chicago increased from 2,000,000.000 dollars to 5,000,000,000 dollars between 1923 and 1928. and fell back to 2,000.000.000 dollars by 1933. Nearly 100 banks in Chicago alone tailed on that account during the depression. Since 1930 tens of thousands of buildings in Canada and the United States had been torn down bv their owners to escape taxation on them.