SYSTEMS OF RATING.

Thames Star, Volume LX, Issue 16959, 4 December 1926, Page 5

SYSTEMS OF RATING.

UNIMPROVED OR ANNUAL?

SHOULD A CHANGE BE MADE? THE POSITION REVIEWED. No great advance has yet been made (says the Evening Post) in the promotion of a petition by the Wellington City Council for the taking of a poll upon the issue of reverting from the present unimproved values system ol rating to a system based on annual values, such as held in Wellington up to 1902, hut steps will now be taken to awaken interest in this question. A statement setting out the broad reasons why, in his opinion, the change should be made was made to a reporter by Cr. M. F. Luckie, as follows - “Almost ever since I have been a member of the City Council I have been convinced that the present system of rating on unimproved . values for general revenue and expenditure has ljeen inimical to the best interests of the city and of grave disadvantage from every point of view to owners of residential properties, more particularly act those who occupy . their own homes. The system of rating on unimproved values is merely -an expedient in the early stages of the development of a city to induce people to build on land owned by them and to penalise the owners of vacant sections which are merely being held that a profit may be obtained as -a reflection of the expenditure of others.

“But in Wellington City we have long since passed that stage, and one of the chief evils from a residential point of view which has resulted from the present system of rating is that it has destroyed practically every -garden which existed in the city. It has become to expensive. for any owner to hold his land adjoining liis home for gardens and lawns.

“The present system, as Mr. O’Regan has already admitted, favours the owners of big ousiness premises at the expense of the small owner of residential property; the big businessman pays no more rates upon premises from which he -receives tremen dously high rent than the adjoining owner’ cf a comparatively 'modest building. Again, in the residential areas, the wealthy man with a £SOOO dwelling on his section is paying no more than the working man living next door in a four or five-roomed cottage.

Upon a False Analogy;

“This system of rating on unimproved values is based on a false analogy of taxation on unimproved values of agricultural and pastoral areas. In country districts it is the natural productivity and richness oi the soil which determine land values, and the improvements are a fixed sum, consisting merely of the amount spent in 'clearing, grassing, fencing, etc. The income from the farm depends upon the natural richness of the soil, and it is right and natural therefore that taxation in country districts should be levied upon unimproved values. The exact converse holds in the city. Land unbuilt ’upon is of fio income value to the owner for his income depends entirely upon the type and value of the building which he erects upon it. _ Yet under our present system the building erected—particularly is this so in the busi ness section of the city-—entirely escapes taxation -as far as the city’s general revenue and expenditure • art concerned.

“If the system of rating on annual values were adopted in W ellington the city’s revenue would grow each year iu accordance with the growth of the citv, an automatic increase in the funds flowing to the City’s Treasury as the developing city called for increased expenditure, but there is no such automatic increase under the unimproved values system, for no increase in revenue can he obtained save by an increase in rates upon land areas.

Valuations at Long Intervals.

“At present tile city lias no vote in making valuations, which, it is provided by statute, are to he the Government valuations then in existence, which valuation are only made at intervals of five -years or upwards The city is not rated upon valuations made in 1921, and no furthei valuation has so far been ordered by the Government. Prior to the making of that last valuation our rates were based upon valuations made in 1911,

“Obviously in a city which is growing as rapidly as Wellington rates struck upon valuations which are five years old must he inadequate to meet steadily growing demands unless the rate is raised each year as increased revenue is required. Furthermore, it is notorious that Government valuations on unimproved values ere, more especially in the business areas, from 80 per cent, and upwards below market values. “In a system of rating upon annual values the value is calculated, as far as residential properties occupied by. owners are concerned, at 6 per cent, on capital value of the property but in business areas and in the ease of properties occupied by tenants it is expressly provided by statute that the annual value upon which the late shall be calculated shall be 80 per cent, of the actual rental received by the owner. When it- is borne in mind that the rents received by owners of business area premises may range from 12 to 15 per cent, of the Government capital value it is easy to see to what a tremendous extent big business people and large owners are escaping their due share of taxation, which share must consequently he imposed upon the owners of small residential properties, an injustice which has existed for the last- 24 or 25 years. During the whole of that time owners have been paying a large proportion of the rates which should have been the contribution of big business and wealthy landlords. “Mr. O’Regan has admitted that tlie larger premises '.are escaping their duo share of taxation under the present system and that they are paying less now than they would be under a system of rating upon annual values, and has stated that this phase of the question would he dealt with later. I have waited for his explanation, but so tar it has not eventuated.

(Continued at bottom of next column.)

Annual Value System in Auckland. “It has been urged that a reversion to rating upon annual values will prevent the building and development of tli-3 city, hut Auckland offers a direct proof of the incorrectness of this statement. Building operations in Auckland have been more rapid than even in Wellington, and. Auckland has the itmnual value rating system.

“Rating on annual value is to the municipality just what income tax is to the State. A man pays to the State in income tax in direct proportion to his earnings, and the municipality under the (.annual value system of rating, receives from property owners revenue in proportion to the earning value of their properties. Than that no more equitable system can be devised.

“It may be mentioned that the system of rating on unimproved values recently adopted in Wanganui has already had the effect of making it impossible for a large number of people to maintain their gardens and grounds and in consequence an enormous area of garden land in a arious parts of that town is being forced on to the market to such an extent that lands for sale are considerably beyond the demands of purchasers. AN anganui is just beginning to feel the same pressure which destroyed gardens in the city of Wellington. “Just as long as the present system lasts the small owner-occupier will be overtaxed, to the benefit of big business and the wealthy landlord, and the owners of these bigger premises will no doubt find themselves allied with Labour in endeavouring to have continued this present pernicious system. The case as between the big owners and the small man is just this: At present the big man is escaping a large proportion of his fair share of taxation but someone must make it up. Under the annual value system the unfair share which is thrust upon the owner-occupier in residential areas will be transferred to where it belongs—to the stouter shoulders of large owners of city properties.