RATING ON UNIMPROVED VALUES.

Gisborne Times, Volume XXVI, Issue 2254, 28 July 1908, Page 1

RATING ON UNIMPROVED VALUES.

SOME EXPRESSIONS OFOPINION A JUST AND EQUITABLE SYSTEM. The Cisborno Borough Council lra« during tho past few days 6ent out tho rntn demands for tho current year, and as Gisborne is now one of a small number of boroughs in the Dominion rating upon tho rental value of property, a “Times” reporter made inquiries yesterday ns to the views of property-holders on tho prosent system, and upon tho system of rating on unimproved values. It might be explained that “Tho Bating on Unimproved Value Act, 1896” gives tho ratepayers power to demand that tho local body shall submit a proposal to adopt the system of rating upon unimproved value to- tho ratopayors vote, for sub-section C section 5 roads, “That a memorial signed, by 15 por cent of tho ratepayers can compel tho local body to take a poll upon tho question within a space of twenty-eight days.”

The method of rating upon unimproved value briefly stated is: That a rate, sufficient for the general purposes of tilio borough, shall bo struck upon tho unimproved value of the land,” —that is upon -the Government Valuer’s estimate of wlnit the land would realiso in tho open market, not upon its original, or what is formed prairio value; —“and in assessing that value, improvement:!, such as buildings, shall not bo taken into consideration.” The present system of rating in the Borough of Gisborne is upon the rental value. Tho Valuer estimates what rent the property would produce a year and upon that a general rate of Is lOd in the £'is now levied. Tho annual rontnil value of tho Borough at present is £91,500, and the general rato of Is Itkl produces £8,386. Tho unimproved .value was, when taken about four years ago, £573,975, hut has probably increased since then, and a general rate of 31d in the £ on the unimproved value would produce a slightly larger amount than at present required. It is true that whatever'amount is required to carry on tho work of the Borough it has to be raised by rates, but the question arises how would the rating be altered by a change of system, and upon whom would the increased burden, if there is any increase, fall? Questioned upon the merits of the 1 two systems a member of the Borough Council stated that he had no doubt rating 'upon unimproved values was not only tho most just and most equitable system, but was also the most desirable in a town where closer settlement was required. Proceeding lie said tho present system of rating resolved itself into nothing but a tax ou property, and a tax on industry, for, instead of inducing property owners to eroct substantial' buildings, it encouraged them to. allow vacant hind to lie idle awaiting for a buyer to come along to offer a good price. “Take for instance,” he continued, “two sections side by side. Upon ono the owner builds a substantial well-’ finished house - , having a verandah, a nice conservatory, a stable and other conveniences. The Valuer comes along and he estimates that the placo would let for £IOO a year, and tlio rate is assessed accordingly. The man noxt door either lets his section ho idle, and the rental value is perhaps £6 per year, and the man who has been thrifty has to boar a heavy burden"Mor his industry. Suppose, however, the second man also builds upon his section, but erects a smaller and cheaper house which would produce about £25 or £3O a year in rent. . He escapes with a rate of less than one-tliird that of his neighbors. Yet the man who put up the larger and more substantial houso, who gives work to artisans of all kinds, contributes an undue proportion, of rates for which lie gets nothing in return save the satisfaction- of living in. a more comfortable house which ho himself lias paid for. The owner or occupier of the less valuable house next door enjoys tho same conveniences, tlie same street lighting, footpaths, and borough privileges at a less cost simply because lie has made a jerrybuilt, structure servo as a residence. It might be agreed, tho speaker continued, that tho richer man who lives in the better house can afford to contribute more to the Borough 'revenue than liis humble neighbor, hut in many cases tho better house is the result of thrift and industry, and is intended for a home, while the jorrybuilt cottage' is often erected with the solo, idea of it returning sufficient rent to pay interest on the capital valuo, and tlie owner s will stick his thumbs into 'his pocket and say to himself, ‘That is a good fellow next door. His house has increased the value of my property, yet ho pays a bigger rate than I do and gets nothing extra in return.’ But even if it could be .agreed that the man in the. better house can -afford to pay rates it is outside the functions of a municipality to impose a class tax, and it :is not to the best interests of a growing town like Gisborne that industry and thrift should be made to bear the burden for the absentee landlord and the land speculator, who pays rates of a minimum amount upon a vacant block on which the value is increasing, through the industry of others, day by day, and the owner calmly awaits to enjoy an unearned profit.”- ’’ Questioned as how rating upon unimproved values would affect property values a land agent, who has had considerable experience, said that he had given the subject a groat deal of consideration, and thought the system of rating upon rental values obsolete, and the Council should put before the -ratepayers a proposal to rate on tlie unimproved values. “Here is a list of Municipalities that rate upon tho uiiimproved values, and you will see that it contains not only the cities of Wellington and Christchurch, but tlie boroughs of Devonport, GreyLynn, Hamilton, Hawera, Stratford, Woodville, Miramar, Karori, Fielding, Lower Hutt, Masterton, Paliiatua, Palmerston North, Petone, Blenheim, Westport, Hokitika, Greyniouth, New Brighton, Woolston, Waimate, Maori Hill, North-East Valley, West Harbour, Balclutha, Gore and Invercargill, or nearly -all the largest towns in tho Dominion. It might be argued,” the speaker continued, “that dn a- large borough like Gisborne it would be unwise to force settlement too rapidly, as -an increased number of houses would mean a' fall in the demand for rental properties, and a consequent decrease in values. That might be true to a small extent; but it is a well-known fact t-liat rental values in Gisborne are far too high, and good lotting properties are difficult to obtain. A tax on unimproved values would cause a more permanent and better class of tenement house to be erected in suitable localities, and these would compete to advantage with many of tho weather-worn cottages that wore erected in tho early days; houses that are

both insanitary and unsightly, and into which tho ront-payefr is forced because lie can get none bettor. Then loss of.ront would bo compensated for to a certain uniount by a docrcnso in rates, though that would not always bo tho caso. Take a certain hotel property in tho centre of the town. Tho rental valuo is assessed at £IOOO per your, and tho gonoral rato amounts, to £9l 13s 4d, the unimproved valuo of that .land is estimated by t'bo Valuation Department at £7382 upon which a rato of 3jd in the £ would produce £lO7 I3s, so that in this instance, as in others,-highly valuable land would be rated heavier than at present. As against this lot mo take a large block of haul in the north end of the town, -near tho Taruhoru river. This land carries large buildings in which a large liumbor of moil are employed. The -rental value of tho property is estimated at £350 per year, and a rato of Is lOd in tho £ on that amount produces £32 Is Bd. The unimproved value of the land is only £-100, and with n 3jd rate would only yield £5 16s Bd, so'it can be seen that tho property o wner’s burden would be lightened in soiho cases and made heavier in others, but the difference would be upon a fair basis, and property would bo rated upon its land value. By rating -upon unimproved values all land would bo called upon to bear its just quota of revenue according to its positioiL.i-n the town. - ’ "

Inquiries among property holders as to how rating upon unimproved values would effect tho various Chinamen’s gardens, and small areas within tho Borough now used for running horses, cow and poultry keeping, wont to show that tlie general effect would bo to on use many of these allotments to lie cut up and built upon. “There are few areas of any size within tho Borough boundaries,” said one gentleman, who owns considerable property, “that aro of any use for providing a -livelihood. Most of the dairyfarms and poultry farms are in tho country; but even if they wero not it is only right that a man should pay for the privilege of dairying or poultry farming within a township; especially when there is a demand for houses. Their land is mostly held on louse, and owned by speculators, and though there, would he some increase in the rates, the increment the land earns ns the town grows would well pay that difference.” Another property owner when asked how rating upon unimproved values would bear upon tho working man, said that there wore two ;v aye of, looking at tho question. The first was that the man who lived in a small houso would lravo to pay the same rates upon land of equal value as the man who lived in -a larger house. That might not he thought right, but when the position was considered it was perfectly fair. “There is no-reason,” ho explained, “vvh.y a man should be taxed by the municipality upon what the municipality does not provide, and if a man provides, a well-built commodious houso for himself, the municipality contributes nothing towards tho cost or loses nothing upon the increased value of the property. Looked at -from other points of view, the workingman must benefit by rating upon unimproved values, because more houses would be built and rents would be more reasonable. A large number of those rafhshacklo cottages on the Waikanae would bo put out of use, and that would be a good thing. Upon that land the owners would bo forced to build houses largo enough to compote with other tenements, or have tho land lying idle and unimproved values provent the centre of the town, from becoming a congested residential area, and anything in the shape of slums arising. The burden of tho rates would bo lifted from tho

house-holder to the land-holder, and the man who is working hard to provide a homo for himself and family, would bo much bettor off. I know of ono caso where a mail has been working -hard for 1 ’ many years to improve bis house, and a fow months ago erected a front fence at a cost of £SO. The fence improved the appearance of the street and the properties on either side, but when the town valuer came along, lie put an additional rental value of £5 on for the fence, and the man had to pay 10s a year more for his thrift. Again, the workingman is seldom a -large land-holder, and it will be the larger and more valuable' areas that would bear the taxation ■ by rating upon unimproved values. Suppose a section is valued at £IOO, tlie general rate would only bo about £1 ss, while tlie rate upon a block of land valued at £IOOO would be £l2 10s. If a man owns a section valued at £IOO, or a rental value of say £5 per year, ho pay 6 about 9s a year in general rates' upon it. Immediately he builds the value of the section is increased, and the cost of the 'houso is added when the rental value is assessed. Suppose the rental value is calculated at £4O a

year, tlie general rate increases from 9s to about £3 10s and the municipality gives nothing in return for the money. Let mo state an actual case. A section in Kaiti was at an’ unimproved value of £4OO, ‘ which would contribute -under unimproved rating, about £5 16s to the general rates, but the rate collected -upon the rental valuo was only £2. A house was erected and immediately an annual rate of £ls was levied. Here was a direct inducement, under tho present borough system, to the owner to let land lie idle. Before a houso was erected a fair quota of revenue was not collected, but, as soon as work was given to builders and the house was completed, a property tax was levied. Rating upon unimproved values is all in favor of the workingman who lias to pay rent, the poor man who is striving to provide -a home, but is -against tlie interests of the landlord, who erects a niake-sliift building or lets land lie useless waiting to reap a profit lie has not earned,”