RATING SYSTEMS

Timaru Herald, Volume CXXXVII, Issue 19804, 21 May 1934, Page 7

RATING SYSTEMS

AVENUE FOR RESEARCH. Rating systems of local bodies are among the subjects that have been suggested to the New Zealand Society of Accountants for research, in the hope that a thorough investigation will help to bring measures of relief to commercial and manufacturing firms. This problem of heavy “overhead” imposed by local bodies is under keen study in England. It is mentioned in “The Accountant” (London) that local rates have two characteristics which make a study of their effects on industry more necessary than in the case of national taxation: (1) They enter into the cost of production, and, in contrast to income-tax, are payable whether a profit is earned or not, so that they form part of the fixed costs which must be allowed for in the prices, and (2) they vary, often considerably, between different areas. In times of prolonged trade depression, local rates not only bulk larger as an element in the cost of production on account of being spread over a small output, but they are actually increased by reason of the more extensive poor relief which results from chronic unemployment. A suggestion has been made by a Government District Auditor in England that municipalities should stabilise their rates for three or five years in order ot create confidence among business people. In his opinion there should be no difficulty in estimating expenditure for a three-year period or longer, and it would be a considerable advantage to the public generally to know that, a*c any rate for that length of time, they could look forward to a fixjed rate.