The Daily News WEDNESDAY, JANUARY 9th, 1907. TAXATION AND RESULTS.

Taranaki Daily News, Volume XLVIII, Issue 81915, 9 January 1907, Page 2

The Daily News WEDNESDAY, JANUARY 9th, 1907. TAXATION AND RESULTS.

Papers -l-i-liiLivt; to tlio working of I taxation of Hie unimproved value of land in .New Zc.iiiand, New South Wales, and Soiitli Australia have been published by tlic liritisli Colonial Otlice as a i'.iuc Hook. .On April .1 Lord Klgin telegraphed to tin- l.ovcrllors of tin' three States requesting thi'in to slippy iiiiu wiih information on thf subject, as regarded taxation both tor niunii'ipal and for Stain purposes, lie ospociuhy desired to iearn tlic ell'i'i'ts of land value taxation on the building trade, on rent, on the 111eiilcnee. of taxation, on liouse properly and vaeanl sites respectively, and 011 land speculation. The Now Zealand Commissioner of Taxes.. _Ur. (J llcyes, sent otil circulars to local authorities, to which he has received replies. JI is remarks and facts are interesting'. lie iirst says as- regards State taxation:—Jn lSt'l the Prop - city Tax Act then in force was repealed by the Land and Income Assessment Act, under which a laud tax was imposed 011 land and mortgages of land, and an incometax on all income other than income derived from laud and mortgages of laud. improvements on laud were exempted up to .113,000. In 1S!)3 an amending Act was passed, by which all improvements on land were entirely exempted, and in 1890 an Act was passed by which the principle of taxation on the unimproved value was extended to local rating by enabling local authorities to adopt the system on a poll of the ratepayers being taken, and a majority voting in favour of its adoption. . . .In iny opinion the exemption of all improvements, (111 conjunction with the lands for settlement and advances to settlers policy of the Government) lias to a huge extent contributed to the solid prosperity of the Colony.

•"The exemption of all improvements led to a very liberal utitluy of capital uf land, which lias rapidly increased as the system was. extended to loci 1 rating;, and thus increased the demand lor labour." lie goes on to say : "In like munncr the closer settlement policy ot the liovornnient in the purchase and sub-division of large estates leads to immediate large expenditure on improvements, and an increase in tiie unimproved value necessarily follows the expenditure of capital on improvements, which are entirely exempt from rates and taxes, and the eil'ect of these conduces largely to increased trade, which necessarily means increased profits for incometax. A study of the table of land tax and income tax revenue for each year from the commencement shows, hist, the drop in laud tax consequent upon total exemption of improvements, then increase consequent upon the increase in unimproved values, largely owing to increased expenditure of capital on improvements; then in l,S!)(i the advent ot "The Lands for Settlement Act" shows the loss of tax on resumption of large estates more than recouped by increase in unimproved values, while the income-tax shows a large and continuance increase year bv year."

As regards local rating lie says: "To enable the system of rating on unimproved value to be adopted by any local authority, the Act provides that a petition signed by not less than lii per cent, of the ratepayers be presented to the local authority, asking that a poll of the ratepayer's be taken; a poll must then be taken, and if the proposal" is carried it comes into force. A rescinding proposal can lie carried nt a poll by the same means as one for adoption, hut not until three years have elapsed, and vice versa, rejection of a proposal bars it being a«ain brought forward for a similar .period. There are 11:1 boroughs in New Zealand (in addition to other local authorities), and of these IS rate on the "capital value." ,">2 on the "annual value,"- and 43 on the- unimproved value, the aggregate capital 'value of rateable property in each case being "capital value,' .U,l»l,i>:!; •••.uiiuii! value." t121i.4X2,01i7: "unimproved va 1 - uc," CiU (i7t»,«o'l. Of the four chief cities in New Zealand (Auckland, population 37,710; Wellington, population .W,5J2; Christchmcli. population 4!),30S; anil ihincdin, population 3(1,073), Wellington and (Jliristchui'cu have adopted the system of rating on the "unimproved value." In no case where the system of rating on the "unimproved value" lias been carried has the former system of rating been reverted to. and the. ratepayers as a rule, with few exceptions, are decidedly in favour of the system, and the approval is strengthened as time goes on, and the eil'ect of it seen.

"The cited litis certainly boon to greatly stimulate the biiikliiifr trade. The object and, tendency of this system of taxation is U> compel land bciiii: pui toiits best, use, so thai (lie greatest amount of income- may lie derived from it, and rendonne it iiuprojitahlo to bold 1:1 Jill for prospective inetelllcni in value. it ba,i been the direct cause of much valuable suburban land brim; cut up and placed on ilie market, and thn> rendered more easily available for residential purposes, and of the sub-division of lar-e estates in the country, resulting in closer settlement. The tendency of this system of taxation is not to increase rent, but. mi tlie contrary, as the tax becomes heavier it tends to bring into beneficial .occsfjuitioii land not put to its best unit and bo reduces rent, the improvements bein;; tntjrely free from all rales anil taxes. In .some eases, where la ml suitable for building sites is limited,' liiuh rents lnive been' maintained the tendoiicv of the system. The ell'eet has becir to cause vacant sites liciii-j put to their best use by expeinliliire on improvements. (In va.-ant sites tin- rates and taxes are increased and continue I to increase as the adjacent sites which., have been improved increase in value. It thus becomes unprofitable lo continue to hold land unimproved. The taxation, on building property, where the improvements exceed the' unimproved value , is decreased; where the unimproved value exceeds the improvements the taxation is increased. The tendency is to discourage speculation as the tax partially or wholly discounts t'hf cise in value, but land speculation lias iv)|t ceased in some districts where tin- lias been adopted."