Taxation in New Zealand 25 



£1,386,459 from licenses, tolls, rents, and other sources, and 

 £1,233,049 from rates. Of this amount £889,716 consisted of 

 general rates, and £343,337 special and separate rates, for water 

 and other special purposes. The sum of £79,593 was raised by 

 licenses, and £25,894 by other taxes, making £1,338,536 alto- 

 gether, which sum is equivalent to £1 9s. 8d. ($7.18) per head 

 of the European population. Since the total of general and local 

 taxation is equal to £6.5 ($31.59) per head of the European pop- 

 ulation, the local taxes are only about one-fourth of the total. 

 The relative unimportance of the local bodies is largely due to 

 the fact that the system of public instruction is wholly supported 

 by the general government, at a cost of £843,311 in the year 

 1907-8. The general government also grants large subsidies to 

 the local bodies. 1 



Before the year 1896 rates might be levied upon the capital 

 value or the annual value of real estate, at the option of the local 

 authorities. The Rating Act defines annual value of property as 

 "the rent at which such property would let from year to year, de- 

 ducting therefrom twenty per centum in the case of houses, build- 

 ings, and other perishable property, and ten per centum in case of 

 land and other hereditaments, but shall in no case be less than 

 five per centum of the fee-simple thereof." Capital value is de- 

 fined as "the sum at which the fee-simple of any ratable property, 

 if held in possession free from incumbrances, is assessed." 2 The 

 system of rating on annual value is preferred by most of the bor- 

 oughs, while the counties usually levy on the capital value. 



The passage of the Land and Income Assessment Act of 1891 

 called the attention of the local bodies to the possibility of a third 

 form of rating, the rating on unimproved values, which had been 

 strongly urged by the followers of Henry George. Besides, there 

 were the usual objections to the existing methods of rating, and 

 there was a certain amount of speculation in land, which in some 

 places was withheld from sale and kept unimproved in anticipa- 

 tion of enhanced values. The laboring class, too, complained of 



"■Year-book, 1908, p. 299. 



2 An Act to Consolidate the Law for Regulating the Making and Levy- 

 ing of Rates. October 9, 1894. 



273 



