TAXING INCREMENT VALUES.

Gisborne Times, Volume XXVIII, Issue 2704, 7 January 1910, Page 4

TAXING INCREMENT VALUES.

According to cable advices, the system of taxing increment land values, which is a feature of the English Budget, is finding great favor with German municipalities at the present time. In fact, it is such a convenient and lucrative method of raising the money that disputes are arising between the State and the municipalities as to which should collect the funds. Apart from the object of revenue producing, the aim of the increment tax in Germany is the same as that known in New Zealand as the unimproved system, namely, to discourage the speculator. However, a consideration of the scheme recently under consideration by the Berlin Municipal Council will show that our unimproved system is' exceedingly mild by comparison. The taxation is to be based on the difference between the price paid for any piece of property and the amount actually realised for it when it changes hands. Three per cent, is to be deducted from the purchase price, to the cost of transfer, and a further 3 per cent, is" to be allowed to provide for the time during which the property may make no return to the owner. All costs incurred by the owner for permanent improvements to the property are to be. deducted from the price realised on re-sale.,The new impost is to be calculated on a sliding scale, startling at 1 per cent, on increment values up to £IOO, and reaching a maximum of 5 per cent, on values of £2OOO and over. In cases where the increment value amounts to from 10 per cent, to 100 per cent, of the purchase price, it is proposed to impose additional charges ranging from 10 per cent, to 90 per cent. of ;the amount or the tax payable under the first scale of charges. Should the increment value

exceed 100 per cent, of tho purchase price a further 100 per cent, will be charged. For instance, on an increment value of £2OOO, which represented over 100 per cent, of the original purchase price, the duty payable would be 5 per cent, under tho first scale plus 100 per cent, of that amount under the second scale, a total of 10 per cent, of the increment value, or £2OO. All this must prove very disconcerting to the land speculator; indeed, it might easily have the effect of putting Jiim out of existence. Those who are inclined to look for two sides to every case may he curious to know what provision as made for those whose property depreciates instead of increases 100 per cent. Does the State or municipality make good the loss? The increment system certainly has great possibilities and Germany’s experience should he closely followed by our own political students.