RATING ON UNIMPEOYED VALUES IN NEW ZEALAND

Otago Witness, Issue 2810, 22 January 1908, Page 37

RATING ON UNIMPEOYED VALUES IN NEW ZEALAND-

«, | !Bt J. E. Le Rossignol and W. Downie Stewabt. - j Rating on. unimproved values i& J histori- ' cally end logically connected with the ordinary and graduated taxes on land levied ft>y -the General Government. This was tone- of the, reasons most frequently urged , sby the supporters of the Rating on Unim- j proved Values Bill for its enactment as ' law. I %n passing, however, it should be pointed out that as the complement of the Government land tax there is the income tax. Sir Robert Stout in Parliament argued that unless something was. i'ntro-. duced in local rating corresponding to the income tax in Government taxation half the wealth* of the cities would be exempted from local taxation. In other words, the -principle of the single 'tax is more clearly applied in the case of local rating on the unimproved value than in the case of. general taxation. At the same time it would be a mistake, Jo suppose' that "the system of rating on nnimproved '■ values owed its enactment chiefly to the advocacy of single-laxers oi; to the disciples of Henry George. The bill . was first' introduced "as part of a ®ene t ral Rating Bill in 1893, -and. then as a separate bill in 1894, 1895, and 1896, in ■which last-mentioned -year it finally passed. In each case the Upper Chamber was responsible for' its "rejection. ' The question was, argued from every point of view, ranging^ from academical discussions of various theories of taxation down to the member who naively replied to his own question, "Why were the arguments against the bill not answered?" by saying "Beoause they were unanswerable," and an the same breath intimated that he was ' going to vote for the bill. One of the most interesting points in the debates was the strong country element among' the advo- j cates of the bill. It might have been thought that, if the measure was to be regarded as a step towards single iax. it •would have exoited unbounded hostility from" the rural constituencies. " -On -the ■ contrary, many of the best speeches' in support of the bill came from rural representatives,- and some of' the best in opposition to' , it came from the oity and j borough members. Several speakers who ] championed the bill strongly disavowed any leanings towards what one of them called " that * infamous proposal, the single tax.' Needless to say, . the bill was , heartily supported by the few single-taxers in Parliament. Mr O'Regan enthusiastically de- I Glared that- "even Henry George himself could not have drafted a more" logical bill than this." A good deal of reliance was placed on , the v fact" that a similar act had been - passed in Queenslaiid >in - 1890. ~Tnideed, one industrious historian unearthed the interesting that under an old Provincial Ordinance in Taranaki in. 1858' rating on -unimproved fa-lues' had' there been in operation " for- many years. The ordinance 'stated^ that " within the town district an -uniform rate per cent, to be assessed -on the value of • all lands within the .district, exclusive of all buildings, erections, and improvements whatsoever, shalL In every , case be imposed, such value to -he ascertained as hereinafter provided." This ordinance was in operation lor many years before Henry George became an influence in the colony. The Ratinir on Unimproved Values Act of August 13, V1896>V 1896> (amended in 1900 and 1903) was supported by the labouring class an general, who complained of high rents, and by" many other persons in places -where land was held for speculative purposes. ■ Before the passage of the actdocal rates - were levied either upon the capital value or the annual value of real estate, at the option of the local body. For -the introduction' of the system of - rating on unimproved values a, written demand, signed by from 15 per cent, to 25 per cent, of the ratepayers, according to the number of ratepayers in the -rating district, must first -be presented, to the ..chairman of the district, requesting that the act be sub-i , iaitted to a vote of the ratepayers. Under the original act a vote, of at least T>ne-third of' the ratepayers was required, and a majority of Votes carried the proposal: Because of this provision the act failed to be adopted in a number of districts,-" but -now' the Local Government Voting' Reform Aot of -1899< provides that abare. majority ,of »the valid votes recorded is sufficient for the adoption of the system. If the' act is adopted no rescinding proposal- can be submitted 'to -the ratepayers j until .the expiration of at least three years, and if a rescinding ■ proposal is carried no adoption proposal may be submitted until -after three years .have elapsed. _ . Section 20 of the act Teads.. as- -follows: — "This act iball- not "apply to water rates,gas rates, eleetrio light rates, sewage rates, i or hospital and charitable aid rate 6." The reason for the exclusion of these rates was ihat, v aa- they represented, services to buildings alone -they should be exceptional rates, and be levied on the gross value and not on , the unimproved value — (Hansard,* 1896 vol. • 85, p. 192). In committee Mr O'Regan, an ardent single- taxer, moved an .amendment having for its object the levying of these exceptional rates on the unimproved value, tut this was lost by a large majority. Since then a similar attempt was made in 1905 by Mr Henry George Ell, who introduced a hill for this purpose. This proposal excited great opposition and < a spirited debate, and. the bill was lost. It shows, however, that the single-taxers of i Heir Zealand are not satisfied with-the small measure of land taxation which they have secured, and that they favour local option only as a means to an end, and, if possible, would make rating on value mandatory in every rating district in the colony. j It anay be as well to mention that in j New Zealand the chief rating bodies are the cities, counties, boroughs, and road districts.' - The boroughs lie geographically within ihfe_ counties, but are,' by law, considered as outside them. * Up- to' the 15* th of May, 1899, proposals for the N adoption of the act had been submitted to. the ratepayers in 23 districts, and In 21 cases were carried by large majorities, Jhe' minorities, in most oases, being remarkably email. In eight cases' less than a third ol the ratepayers voted, and the proposal ; fvas rejected, but in all of these districts I it was carried' at a later date. Up to March 31, 1906, the act had been rejected by 12 i districts and adopted by 69, including two ! Vties out of*a total of five, 19 counties out ©f 87, 3d boroughs-out of 97, nine road dis- : jtriott out of 214, and one Mich' district out j

of 32. In the year 1904- the act was carried by six "districts, and r - rejected by one; in 1905 it was '"carried by six districts and rejected -by six. No district has ever departed from the system after its adoption, although three proposals i to do so have been made, and in two cases 1 a strong opposition was developed. In the third case the vote on both sides was less than when the act was adopted. The vote is seldom a large proportion of the total ratepayers. i In Wellington, the capital of the colony, i the new system i 6 in force. It is indisput- ! able that since its inception there has been j I a continual process of cutting up gardens, concentration of buildings,' and increase of slum areas. The rapid increase of land values has undoubtedly largely contributed to this result. But it seems equally clear that the new system of rating has been a contributing factor. This was clearly foreseen by the present Chief Justice (Sir Robert Stout), who led the opposition to the bill in Parliament. He predicted that the effect I of the bill would be to do away with the vacant spaces — with the lungs of the cities. ! He emphatically declared that, while in other lands reformers were struggling to get ! open spaces, this proposed legislation would lead in exactly the opposite direction in New Zealand. The results he so clearly foresaw Have certainly &v&nbi2aj:e*i i» "Wellington, and the" combined effect of the rating op unimproved values and the pheno,menal rise in land values has been to rob , "Wellington of the amenities which help to make city life tolerable. If the foregoing is a correct statement of the position Mr Ell is surely- mistaken when he appeals to the ratepayers to adopt the system in these terms: — "The man who takes a pride i?i his home, and rejoices in a pretty flower garden and a well-trimmed lawn and many other improvements that e;o towards making a cottage home pretty and attractive would, if this system is adopted by the ratepayers of Dunedin, not be penalised for making his home more attractive and comfortable " (Evening Star, I Dunedin, "25th January, 1902). On the coni trary, the experience of Wellington seems to justify the conclusion of several, eminent .^writers that the rating of unimproved i '-values tends to -bring about a congestion of . population and " the pretty -flower gardens and -well-trimmed lawns" are penalised out ■ of existence. The following table shows the progress of i .the system as at 31st March, 1907, in regard to the, other classes of local bodies: —

These -figures" show ""clearly- that an overwhelming proportion" of tho.se local bodies which have voted have adopted ,the system. -■They "also show ' that "the act has chieSV -been taken advantage of -.by the boroughs, mow. than half of ■ which have voted "upon, ! and more than 40 per cent, of which have j adopted, the system. On the other hand, i while about only, one-fifth of the counties have voted, they have in every cage adopted the system. The explanation of these facts '—namely, the large percentage of boroughs that have voted with varying results and • the smaller percentage of counties that have j voted with always one result — may be found I in some degree in the following considerations. The boroughs represent the class of local bodies in which the evils of land speculation are most felt. Their populations range from a few hundred to 10,000. They" come midway in the scale of local bodies. They are neither purely rural nor purely urban. x Their improvements constitute a greater percentage of their value than .do the improvements in the rural districts. At the same time, these improvements are not uniformly distributed. The ''boroughs contain many vacant sections — sometimes held in blodks for a rise j in value — sometimes held as grazing padi docks. Hence,- in the boroughs, the evils of ' land speculation press on the notice of even the-,casual passer-by, who may never have • heard of the doctrines of Henry George. | At the Bam© time it is in the boroughs that oases of hardship moat frequently _ occur. Some market gardener or small dairy farmer finds himself confronted with increased rates, while' he himself is v6id of offence so far fas concerns the evils against Avhieh the -system is ostensibly \ , direoted. These two considerations account to some extent for the large number of "boroughs which have voted, and also for the rejection, in 3ome cases, of the pro- | 9osaJ. No doubt, also, the concentration of -population as compared" with the counties makes it. easier to obtain "a vote. In • the case of the - counties it may be inferred that the wider areas ~and sparser I population, render it- more difficult to set the proposal on foot and to work up opinion^ on the ' matter. At the same time, the uniform carrying of the proposal in the counties confirms the prediction made by numerous speakers in Parliament that the rural districts would welcome tbe system. Nearly all the 'county lands are farm lands. ' Compared with urban lands, the improvements on farm lands weigh light as against the unimproved values. This is more especially the cage when it is remembered that " unimproved value " is never treated as being synonymous '-with "prairie value." The two terms are quite distinct. The unimproved value is what the land would sell for without improvements — that is to , say, the selling value contains as an element to markets, railways, roade, etc., ■ which prairie value would not have. Apparently unimproved value is composed of two elements — prairie value plus commu-nity-created value. Thi6 distinction is a stumbling block to many who challenge the official valuations. But the distinction seems necessary and logical. In any case, owing to the preponderance of unimproved over improved values in the rural districts, it seems to make less difference to the farmer which method is adopted than to the •urban ' ratepayer. 'In - conversation with farmers ! who may be contemplating the erection of a new woolshed or other improvement it will be found that they entertain no doubt at all that the new system is the most equii table, y The reply is - nearly always the 1 same: "Why should I be taxed for im1 proving my property, while my neighbour, S who puts his money in the bank, goe* untaxed? " I (To- b.e continued.) ' From April 1, 1907, to December 31, 1907, the Ashburton County Council pur1 chased the tails of 1020 rats at 3d each, ! &Tl2 IS for the lot,

Count^s ' Boroughs Road ' districts 5, i 97 103 212 f% £•£ |)g |. ill (Sl^ 20 20 20.6 63 42 40.7 12 10 4.7