The Gisborne Times PUBLISHED EVERY MORNING. WEDNESDAY, SEPTEMBER 1,1909 CONCERNING VALUATIONS.

Gisborne Times, Volume XXVII, Issue 2595, 1 September 1909, Page 4

The Gisborne Times PUBLISHED EVERY MORNING. WEDNESDAY, SEPTEMBER 1,1909 CONCERNING VALUATIONS.

Anyone who has given consideration to the matter must realise that the methods by which. Government valuations are carried out are entirely wrong. Time was when the estimate of the Government Valuation Department as to the value of a property could be accepted as the legitimate basis for a deal by a conservative business man. In latter years, however, the Department has vied with the most sanguine of land speculators im its endeavors to force up the price of all kinds of property. There are two alternatives of policy in fixing the Government valuation of a property for taxing purposes... The one is to assess its value' at a figure which it might realise if sold under extremely favorable circumstances ; the other is to' assess at a price which it could beyond all reasonable doubt produce if placed in the open market under average conditions.- The one is a speculation, the other a conservative policy. In the latter case a. prospective buyer has an estimate of real value to guide him in deciding upon a purchase, and whoever owns the property is the more likely to make it a payable proposition. Supposing, however, the Government raises the valuation of a property from £IOOO to £1250. The land will not produce any more than it did before, but the ideas of everyone concerned in regard to its value have undergone a change. The original owner will probably sell for £1250, he pockets the additional £250 and is glad; but those who follow him are forced to extract more from the land than was formerly obtained or else accept a smaller and probably unsafe margin of profit. Should prices of products go down the end of all this is disaster either to the man on the land or the mortgagor who lent him money—possibly both. Meantime a long train of similar incidents has been set going. Another farmer whose property has been raised by the assessor from £I2OO to £I6OO becomes annoyed at what he thinks is an unfair valuation, and not caring to pay increased taxes, prepares to object.However, he hears of the manner in which the high Government valuation assisted his neighbor to make a good sale, and trusting for similar luck, he stays-his protest. So the circle widens and in this way the Government assessors have played an invidious part in the land speculation which has been rampant in the Dominion for several years past. We do not blame the Government entirely for the over-inflation of land values which has been a marked factor in the depression that has come upon the Dominion. Year after year of steadily advancing prices for the raw products of the land, and season, after season of excellent climatic conditions, made our farmers over confident, and they were willing to pay almost any price to get on the land. Where the Government acted foolishly was in permitting its officers to keep pace and sometimes outstrip the wildest of speculators in the rapid increases it made to the valuations. By so doing it was enabled to collect more taxes while professing to reduce taxation, but it precipitated a boom in land, the evil effects of which will he apparent for many years to come. Instead of acting as a check upon, wild and foolish trading the Government Valuation Department has encouraged reckless speculation.

The same principle obtains in towns as well a s in the country, and Gisborne provides abundant proof of the fact. The inherent value of businesss sites should be fixed by the volume of business transacted and, judged by this standard, values are absurdly high. The result is manifest at once in the rental charges which are almost as high in Gisborne as they are in towns that have ten times the population. The shopkeeper in his turn has to pass the charge on to the consumer, and one important factor in the high prices of breadj groceries, meat, etc., is thus explained. With residential land it is just the same, and a good site costs nearly as much in Gisborne as it would in Auckland, Christchurch or Dunedin. The result is that by the time a young married couple have paid interest on a section and house, rates, insurance—to say nothing of drainage and street loans to come —they are saddled with a very heavy impost which seriously cripples their financial progress. It is safe to say that three-fourths of the propertyowners in Gisborne are convinced that the present day values are really fictitious and that the Government valuations do not represent a sound, conservative estimate. Privately they complain bitterly, but for obvious reasons they do not go to the Assessment Court with their grievances. Firstly, they have a very natural repugnance to appear in Court and parade their private, affairs; secondly, they, do not relish a public encounter wijth a Government official, against whom they feel they would bo at a disadvantage; tliirdly, it is unreasonable toi expect any’ man to publicly depreciate the valuo of his property, for he never; knows when he : may want to sell. He may know that his. property is not north the Government valuation, but he will suffer a large measure of injustice ; before ■

making public -proclamation bf fact. So the system works. The bulk of the people fail. ,to object and their silence is wrongly quoted as proo o acquiescence in the Valuer’s estimates. Of those who do protest the larger proportion gladly accepts the compromise offered in his office by the Valuer, rather than take the cases to Court-a man who has been taxed upon £I3OO is usually so delighted to find that it can bo reduced to £llOO without any fuss or bother that he never dreams of taking his case on to the Assessment Court; though that tribunal might, possibly have brought his .taxes still lower. We could quote other bad features of the existent system, but enough has been said to indicate that the policy of the Government Valuation Department is sadly in. need of revision if it is to take its part in assisting to keep the -commercial operations of the Dominion on a sound and conservative basis.