CIVIC TAXATION IN DOMINION

Southland Times, Issue 24422, 30 April 1941, Page 6

CIVIC TAXATION IN DOMINION

Canadian Expert Investigating

(P.A.) WELLINGTON, April 29., An investigation of New Zealand’s system of municipal taxation is being made on behalf of the International Research Committee on Real Estate Taxation by the committee’s director of research, Mr H. Bronson Cowan, of Peterborough, Ontario, Canada, who 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 about the effect on municipal administration and economic and social conditions of the policy of partial or total exemption of improvements from municipal taxation and dependence on site values or ground rents as the principal sources of local revenues. The vicechairman of the committee is Mr F. C. R. Douglas, M.P., chairman of the Finance Committee of the London County Council.

Interviewed today, Mr Cowan said the system of raising municipal revenue by taxation on unimproved land values was first adopted in New Zealand 40 years ago. Today 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 the 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 the United States and Canada than on cities in New Zealand because they had to bear the cost of education and law enforcement, which here were met by the central Government. In England the Government gave direct grants to 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 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 1923 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.