THE SYSTEM OF RATING.

Ohinemuri Gazette, Volume XXI, Issue 2727, 5 December 1910, Page 2

THE SYSTEM OF RATING.

DISCUSSION BY CHAMBER ; OF COMMERCE. •

A special meeting of the Paeroa Chamber ot Commerce was held in the County office on Friday evening for the - purpose of discussing a motion by Mr T. E. Shaw, affirming the desirability of rating on unimproved values, and asking the County Council to take the requisite steps to have a poll of ratepayers taken on the question.

Mr W. McWatters (president) was in the chair, the other members present being Messrs Adnams, Hanna, Quick, Moresby, Bush, Whitten, Shaw, Martin, Gillman, Tracy, de Castro, Ellis, and Black (secretary).

Letters concerning the results of rat-

ing on unimproved values were received from the Southland County Council, Invercargill Council, Tauranga County Council, Nparuawahia Land Board and Hamilton Borough Council. The replies received were, generally favourable to the system. Mr Shaw, in moving the motion, said that rating on unimproved values increased population and building, and ' did away with fictitious values ot land. the latter being a matter from which this district was suffering to some extent. The system should be adopted here as it would make for progress. Mr Elias Martin seconded the motion, saying that the system of rating on unimproved values was authorised by the " Rating Act, 1908." It means the rating of lands not improved by the expenditure of capital or by occupation. The question was one that had lately occupied the attention of a great many corporate bodies in Ne# Zealand, and fhe fact that so many bodies had adopted this system was sufficient reason for the chamber giving the matter its serious consideration. In Ohinemuri they had > land that was free trom the imposition of rates because it was not improved, and that was an incentive to owners to " hang on to " the land indefinitely. The result was that settlement did not progress as fast as it should do. Take two sections, the original value of each of which was ,£2OO. One rrian improved his section until it was worth £500, and he then found himself rated on while his neighbour was not rated at all. In time they found that the owner of the other section had the value of his land increased to by the exertions of others although he had done nothing himself and had not paid any rates. i The only way to obtain development ot the County was to have all the land utilised, but this would not happen if people could hold onto the land without paying rates. As to farming land, all land that was tilled was deemed to be improved land, and, such being the case, farming land.was not going to suffer by* the system of rating on. unimproved values. Nor would the town lots suffer, because the vacant sections would be sold. It was noticeable that many „ vacant sections were held in township and the building thus diverted to another part. Under a system of rating on unimproved values, building operations would go ahead, and land would be prevented from going to fie- . titious values. People would not, be able to hold land indefinitely because the profits would be eaten up by taxa-: ~'~'

tion. As. to mining lands, residence sites and business sites would be liable for rates on the unimproved value. The matter was well worthy of consider-

atton, as the system ot rating on unimproved values was a practical policy, and the fact that so many local bodies had adopted the system and reaffirmed it showed that it worked in the right direction.. The President said that Mr Martin was incorrect in saying that vacant sections paid no rates, as they certainly had to pay something, although not so much as the occupied sections. Mr Martin said the vacant sections paid rates but not a proportionate amount of the rates. Mr Shaw instanced the case of three men who recently purchased neighbouring sections in Paeroa for, say, " each, Two ot these men put up houses and increased the value ot their sections by each, with the result that they iound themselves rated on They had the gas and water laid on, and this antl their improvements so improved the value of the other man's land (who had done nothing) until now he wanted ;£ioo for his section.' There was also the case of the man who improved his farming land from ,£1 to £4 per acre with the result that he had to pay iour times as much rates. The President said that the effect of rating on unimproved values seemed to be that the land that was unoccupied and unused would have to pay the same amount ot rates as the land that was used and built on. That being so, he was 111 accord with the system. In any case, it would do good to have the matter ventilated. Mr bhaw said that it, aiter three years' trial of the system, the ratepayers were not satisfied with'it they could go back to the present system. What he ..,?■• wanted done now was a requisition to '" be signed by 15 per cent of the ratepayers, asking the County Council to "h take a poll on the question. Mr T. A. Moresby said that the sys- ■-v tern of rating on unimproved values in.- . this district did not appeal to him in the ; [j same way as it did to some of tbft ■«

others. The Act provided three methods of rating, namely, on the capital value, the annual value, and the unimproved value, and the idea was that the system best suited to a locality should be adopted by that locality. They therefore wanted to find which system best suited Ohinemuri. Although Ohinemuri was a large County containing 306,000 acres, only 34)O°° acres were rateable, so that there was still any amount of room lor population. They wanted to get the land opened up and the people settled on the Crown land which at present was not rateable' At present only a comparatively few holdings paid rates, only about oneninth ot the County being rateable. Apart from the mining, it was the farming industry that had made this distiict go ahead, and if they were going to rate the "cockatoo" on the unimproved value they were going to penalise him. If the system of rating on unimproved values was adopted the rates would have to be doubled, and that meant doubling the rates on the farmers. A large amount of unimproved land had been brought

into cultivation since the butter factory started here, and that was partly because the farmer had been encouraged by the rating on the capital value. Although the system of rating on unimproved values may be good for some places, it would not be suitable here owing to only one-ninth of the County being rateable. If they were going to get the unimproved land taken up it would be a mistake to rate on the unimproved value. It they made the rating on the unimproved value they would be enemies ot the ." cockatoo," as it would mean penalising settlement. The President pointed out that under the present system of rating the man who improved his section by putting up buildings was penalised by having to pay higher rates. Very often the man who erected buildings was penalised doubly by having to pay interest on borrowed money and by having to pay more rates. Mr Moresby said that the less they taxed new settlers the more chance there would be of getting the County settled. He agreed that some ol the arguments in favour of rating on unim-

proved values were unanswerable from an academical point of view, but the

system was not suitable to this County. Mr E. V. Quick, in answer to a question, said that the turnover of the Thames Valley Co-operative Dairying nine years ago was ,£IO,OOO a year, while this year they hoped the turnover would reach ;£ 100,000. The new system of rating on unimproved values was not the unmixed blessing that some people would lead them to believe. He understood that members of the Piako County Council (in which district rating on unimproved values was in force) were pretty well agreed that the system was not good for that district as the capitalist benefited at the expense of the small farmer. In one case a large holder, who formerly paid £317 in rates, now paid only ,£250, and this seemed to be the case right through ' the district. The Okoroire Hotel, which formerly paid ,£24 per year in rates, now paid only 19s 2d per year. If they introduced the system of rating on unimproved values here, the townpeople might have their rates reduced, but the —farmer would have to suffer. The President said it was not his idea for the townspeople to escape from having to pay their fair share of rating, but to get the most equitable system of taxation" for the whole district. Mr Shaw remarked that under the present system the man who put up a ;£iooo building was penalised by having to pay more rates. Mr Moresby: The chances are that the man with the can afford to pay more rates. Mr Hanna said that the unimproved value of mining sections was practically nothing, so that by the proposed system they would lose the rates at present derived from residence and business sites, and put the taxation on the farmer. The proposed system would not affect the speculator, as the amount of rates he would be called on to pay would not hurt him, and in any case they wanted the speculator to advertise the district. The man who acquired land from the Natives and cut it up was going to do good to the district. Mr Martin said he failed to see how the small farmer would be penalised .under the system of rating on unimproved values, as it would assist him by encouraging him to put up buildings, As to mining sites, the rates derived from them at the very time were very

small indeed, so that they could not lose much. The system would not do the damage to the small farmer that they weie asked to believe, as it would lessen

his rates and give him an incentive to build. Mr W. J. Adnams said that apparently " rating on unimproved values " was a misnomer, so that he did not see the force of it. A speculator often had to spend a great amount of money before he got any return, so that he was entitled to some profit. Mr Moresby said that a rate on the unimproved value must fall on the farmer. Maybe it was a very good principle in well settled districts, but it would not do here. If they took the rating off the improvements they would have to put it on the land, and this would press heavily on the struggling farmer. Mr G. P. de Castro said it was obvious that neither side wished to tax the struggling farmer. The idea was to have the vacant town sections used, so that if they could have the system apply to the town only it would be a good thing. i The President said that the system of rating would have to be the same right throughout the County.

M,r de Castro said he did not see how rating on unimproved values would be a benefit in this County as things are at present. If anything could be done to

open up the vacant town sections he would be in favour of it. Lots of people, however, who held sections would rather wait until they had the money instead of borrowing it } and under a system of rating on unimproved values those people would be penalised.

. Mr Gillman said he thought it would be advisable to have some more figures similar to those supplied by Mr Quick before coming to a decision on the matter. There was, however, a little more desultory discussion, and the motion was then put to the meeting and was lost, the voting being five in favour of it and six against. Some of those present did not vote. The meeting then terminated with the usual vote of thanks to the chairman, Mr T. Shaw expi'essmg his intention of obtaining a requisition for a poll signed by 15 per cent of the ratepayers, which he would present to the County Council.