THE RATING QUESTION.

Manawatu Herald, Volume XLIX, Issue 3795, 22 May 1928, Page 1

THE RATING QUESTION.

SMALL BOROUGHS. DISTRICT LAND VALUER’S OPINION. , In order to get a departmental officer’s view on the subject of rating in small boroughs and town districts, a Wanganui “Chronicle” representative waited upon the district land valuer, Mr. O. H. Gardner, and suggested to him that in view of the commission being held in Otaki, and the reminder by the Hon. A. D. McLeod, Minister* of Lands, as to the importance of the rating problem, he might give an outline of the position from the valuer’s point of view.

“Is the rating problem at all acute in any of the districts under your charge?” asked the reporter. “Yes,” replied Mr. Gardner, “the position in several of the rating districts is anything but satisfactory and appears to be due partly to a failure on the part of some of the authorities to grasp the purpose of. a local body. A land tax and a rate are based upon two different principles. The former is in the nature of a rent, which under the feudal system was imposed 'by the Crown in consideration of the right to hold lands. The latter is a contribution to a fund to provide special services for the -direct benefit of the land rated. It -'follows then that, under whatever system of rating is adopted, any lands which are not to be served have no right to be included in a rating area.

DISTINGUISHING BETWEEN SERVICES.

“It is also necessary to distinguish between those services which benefit the land, although not ad-, jacent to it, such as roads and bridges, and those which confer no benefit unless brought to the land, as water and sewers. A good metalled road within ten miles of a property adds value to it, while a sewer within fifty yards adds nothing. “In some of our smaller boroughs and town districts liabilities have been incurred which would be too heavy to be borne by those alone who benefit, and which are unjust to those. who do not benefit, or have no reasonable prospect of benefiting. In some of our town districts water, sewers, and lighting have been provided for a small part of the area rated, and a heavy rate is struck over the whole area. IS THERE NO REMEDY ? It is difficult to find a remedy where the evils exists, but it appears to me that such a state of affairs should be prevented from arising by classifying local body services as above indicated and enacting that before a proposal to provide such services as water and sewers can be carried out, plans and specifications with estimates and the necessary rate for the portion of the district to be served, should be prepared and put before the ratepayers in that area alone, and such area should be a special rating area. Also before such a proposal is put before tho ratepayers the Public Works Department. should be required to cheek the estimates and endorse them. Does not a new valuation mitigate any injustice? To a very small extent it does by adding to the value of land benefited by a work and deducting from land reduced in value by a rate. Land, however, may have a considerable value before any work is darried out by a local body and a rate is not struck merely on the added values, given by such work but on the full value.

THE EFFECT OF. AN INCREAS--1 . ED RATE.

“Can you illustrate the effect of an increased rate on the valuation?” “It has different effects under the different systems of rating. For example suppose for easy calculation that 7 per cent, all round is a fair return to the owner of property, and take as a very rough average, the unimproved value of a residential property as one sixth of the capital, of a business site two-thirds, and a farming area three-quarters. Suppose then that there are three properties each producing £IOO per annum nett without rates. Under rating on unimproved value the values would be as follows: —Case 1, Residential: Values without rate at 7 per cent., capital £1430, improvements £1200,. unimproved £230; with rate of 5d j 7 per cent, on improvements is £B4; unimproved value reduced to £176; rates £3 13s fid; interest 'on £176 at 7 per cent, on reduced capital £96 6s fid. Case 2, Business Site.—Values without rates at 7 per cent., capital £1430, improvements £4BO, un-

improved £950; rate sd; 7 per cent, on improvements £33 12s; unimproved value reduced to £731; rates £ls 4s 7d; interest on £731 at 7 per cent. £sl 3s sd; total interest at 7 per cent, on reduced capital £B4 15s sd. 'Case 3, Farming Area.. —Values

without rates at 7 per cent., capital £1430, improvements £360, unimproved £1070; rate sd; 7 . per cent, on improvements, £25 4s; unimproved value reduced to £821; rates £l7 3s; interest on £824 at 7 per cent. £57 13s; total interest at 7 per cent, on reduced capital £B2 17s. If the rate were increased to lOd the figures would be: —Case 1: Unimproved £l4O, rate £5 lfis Sd. Case 2: Unimproved £595, rate £24 15s lOd. Case 3: Unimproved £670, rate £27 ’Bs 4d. All the above figures given are approximate only, the proportion of unimproved to capital value varying considerably.

“If in the above eases the rate were on the capital value, then, to raise the same income, the local body would strike a rate of approximately 2-3 d. The capital value of each property would then be reduced to £1257, the rate for each would be £l2 Is, and interest on the reduced value at 7 per cent. £B7 10s. “These figures illustrate merely the effect of the rate on the valuation, assuming that the work for which the rate is struck adds no value to the land. If special rating areas as suggested were provided for, this could hardly. occur. These remarks do not touch the question of the wisdom of adopting either system of rating. That rests with the ratepayers.”