HC Deb 11 April 1866 vol 182 cc1083-92

Order for Second Reading read.

MR. DUNLOP moved the second reading of this Bill. He said, that in Scotland there were two modes of imposing the rates, some being levied on the gross and others on the net rental. A question had been raised as to whether all the rates should be calculated upon the net or the gross rental, and the Committee which was appointed to consider the subject decided that the net rental should be taken for the purpose of estimating all rates upon property. Then a difficulty arose as to the mode of making the deductions in order to arrive at the net rental, as different parishes adopted different systems. He therefore proposed by the present Bill that the duty of ascertaining the amount of the deductions to be made should be discharged by a public assessor, who should be guided by one rule in every parish. The various modes in which deductions were at present made by the different parochial Boards were not a little extraordinary. In the case of railways and canals the deductions varied in the several parishes from 5 to 35 per cent. It was altogether indefensible that such a system should be pursued, and that property of the same kind and value in various parishes should be assessed upon so widely different a principle. He thought everybody would admit the desirability of one system being employed in the levying of the rates, and that it was impossible to maintain the present plan of estimating the poor rates on the net and the county rates on the gross rental. Since the passing of the Valuation Act new rates had been calculated upon the gross rental, but in many case this involved great inconvenience, and in some absolute injustice. The only word he would say in favour of the net as against the gross rental was, that it was the plan adopted in England and Ireland, and that already two-thirds of the local rates in Scotland were levied in accordance with it. In regard to railway property, the cost of maintaining and keeping up the roadways amounted to one sum upon all the length of line. But the rents varied so considerably that in some cases they were only 18 per cent on the value; while in others they reached as high as 68 per cent. Thus, one railway would be yielding to the proprietors 82 per cent gross value, while another would be 32 per cent. There were great complaints of inequalities of this sort, hut the only question involved in the present Bill was a question of principle. At present an appeal against the assessment was allowed in certain cases, and he proposed in this Bill to extend it to all cases, whether the Government surveyor had been appointed by the local authorities or not. He admitted that the change he proposed would involve some inconvenience to private companies, such as gas and water companies, who were confined to a maximum charge upon the persons they supplied; hut details of that nature would be best dealt with in Committee. As to any objection which might be raised that the Bill would throw increased trouble and additional work upon the collectors, he would only say that two-thirds of the whole of the local rates were at present levied in the way he proposed, and that deduction must be made in order to levy the poor rates. He had brought forward the present measure with an earnest desire to make some improvement in the method of levying rates in Scotland, and he hoped it would receive the concurrence of the House.

Motion made, and Question proposed, "That the Bill be now read a second time."(Mr. Dunlop.)

THE LORD ADVOCATE

said, he regretted that he felt it his duty to oppose the further progress of the Bill. He gave notice that he would do so when the Bill was introduced; and, after full consideration of the subject, he was satisfied that, instead of improving the present state of the law, it would re-enact many grievances that had been got rid of, would be exceedingly unpopular, and would put obstacles in the way of progress. It had always struck him that the practical character of the English mind was less exemplified in the local taxation of the country than in any other public institution. It might have been expected that in a country so heavily taxed as England, where complaints of heavy taxation were so numerous, that a reasonable mode of making the collection and rendering the incidence of such taxation as light as possible by a sensible and economical arrangement would be adopted. It would, further, naturally be expected that a course similar to that a tradesman would adopt in his business would be pursued in the matter of taxation, and that there would be one assessment and one collection. Instead of this, on both sides of the Tweed the system of assessing and collecting local taxes appeared to him to be in a most rude, he might almost say, a barbarous condition. The example of England had been referred to, but, having looked into the Electoral Franchise Returns—where hon. Members would find a large amount of information respecting local taxation—he discovered much requiring amendment. In Scotland, however, previous to 1854, matters were even worse than in England. In the latter country now there was a county rate, and under the principle of union chargeability there had of late been an attempt to bring the local taxation of the country into a general system. In Scotland, prior to 1854, wherever there was a separate power of assessment and a separate body to assess, there a separate principle of assessment and a separate valuation prevailed, and a separate valuator was appointed, so that the expense of collection amounted to a formidable additional tax. The main object of the Valuation Act of 1854 was the accomplishment of reform in this matter, by mitigating the expense of the collection, and in some degree counterbalancing the weight and incidence of the heavy taxation. The Act of 1854 provided for taking up the gross valuation year by year, and the assessment was based upon it. The Committee that sat in that year upon this subject disposed of the question raised by his hon. Friend—he meant the question of how far it was possible or desirable, while the gross rental was the subject of valuation, to lay down a system or schedule of deductions to be made on different kinds of property, and the conclusion which the Committee came to was what he believed the House would now arrive at—namely, that it was neither possible nor desirable to frame such a system. The Valuation Act of 1854 left the principle of deduction where it found it, with this exception—that it made the gross rental the basis for all local assessments. That was one step gained, providing one certain foundation on which assessments should be taken. It was not necessary that each parish should have its own valuator, and a county valuator was appointed to have the general supervision of all the parishes in the county. The next step was equally important. An Act was passed rendering it optional for counties or boroughs to employ the Government assessor to make out the valuations. He knew that advantage to a great extent had been taken of this provision. Some of the largest counties and boroughs had employed the Government assesssor; and this course involved not the slightest expense to those counties and boroughs. He found in the evidence before the Committee that no complaint from any quarter was ever heard as to the way in which these officials discharged their duty. Following out the subsequent statutes he bad indicated, the next thing was in imposing assessments to take the gross rental as the rule. This had been done as regards the prison and police rates; and he found also in the evidence before the Committee, as far as he could learn, that there had not been one complaint from any quarter whatever in regard to making the assessment upon the gross rental. He apprehended that the present Bill was brought forward because the railway interest was discontented as to the way in which the parishes made the deductions in reference to the poor rate. The poor rate still continued to be levied on what he could not help regarding as the vicious principle of each parish making deductions on the property assessed. It had been found that where no deductions were made there were no complaints; but wherever deductions had been made, there had been constant complaints. The complaints had been inquired into, and the House had now a Report upon them. But the Report, instead of being in accordance with the evidence, proposed even to undo all that had been done, and to draw an impassable line between Imperial and local taxation. The Imperial taxation was taken on the gross rental; and people who complained of the injustice of that seemed to forget that the income tax was assessed on that principle and no other. Until 1806 or 1809, the principle of making deductions from the gross rental was adopted; but it was found to work inconveniently, and from 1809 up to the present time, the income tax, whenever it had been levied, had been assessed upon the gross. A great deal had been said in the examination of the witnesses about justice; but it seemed to him that taxation was a subject on which abstract justice was impossible. When local taxes are laid on the value of property, the real object was not so much to ascertain the precise amount received by the proprietor as the ratepayer's ability to pay, and his interest in the locality subject to the tax. The principle of taking the value of the property which a man held in a particular parish or county had nothing whatever to recommend it, except its convenience. Take the instance of a millowner, who employed 150 people in his mill. That mill, perhaps, brought him in £5,000 a year; but he was assessed on the value of the buildings on a rental of £200 a year. His next door neighbour had, perhaps, a property worth £200 a year, and was assessed at that amount; and thus both men would have to pay a similar amount, although one might derive £5,000 a year from his property, and the other only £200. It would in the end, however, really become as symmetrical as any principle or system of assessment which could be devised. In Scotland, they had at one time another mode of assessment far nearer abstract justice, but which they had abolished. It acted on the same principle as an income tax; for the millowner who obtained £5,000 a year from his mill would have to pay upon that sum, because that was the income which he derived from his property; while the man next door who owned property which, was only worth £200 a year, would only have to pay upon that amount. That system was a gread deal nearer abstract justice than was the other; but then the expense which it occasioned, and the vexation and delay created by the inquiries which had to be made, ultimately led to the abolition of the system. So much for the principle of the Bill. The Committee had two matters brought specially before them—first, as to the general principle of allowing deductions; and secondly, supposing deductions were to be allowed, on what footing they were to be made. He had a Report of the proceedings before the Committee before him. There was a great deal of evidence on the first of these heads, altogether of a most distinct and conclusive character, to show that no change was necessary. There were twenty-nine witnesses examined; of these, fourteen consisted mainly of witnesses representing special interests, such as railways, canals, and mills, and included two witnesses to English practice, and one to the law on the subject. The other fifteen were witnesses of skill and experience in the actual work of assessment, being the assessors or public officers employed in that department in the most populous burghs and counties in Scotland. He might say these last witnesses were unanimous against the principle of the present Bill. The clerk of supply of Lanarkshire, the assessors both for the city and county of Edinburgh, the collector of the parish of Govan, the assessor and the clerk of supply in Aberdeenshire, the public officers of Elgin, of Ayrshire, and Kirkcudbrightshire, and lastly, the assessor for the great community of Glasgow, Mr. Donaldson, who had more experience in this matter than probably any other official in Scotland, were clear and decided in condemning it; and yet the Committee, in the face of evidence which really presented no element of doubt or conflict, report in direct opposition to it. In these circumstances he felt it necessary to oppose the Bill, because he thought it was founded upon a mistake, and that it ought not to be carried out. If he were asked what it was he wished to have done, he should say he wished to see all assessments placed upon the gross rental; and he would even move further, and say that all the collections ought to be placed in the hands of one man. Some reference had been made with respect to deductions in England, and he might say, with regard to the borough of Liverpool, that he found it in the evidence of one gentleman who was examined that there were three separate systems or principles of deduction made there. There was a deduction of 20 per cent made in certain townships in Liverpool, including Everton and West Derby, upon the gross estimated rental of houses at and under £10 a year, while there was a deduction of 5 per cent made in other townships, including Toxteth Park, and in the parish of Liverpool a deduction of 1 per cent. So that in the borough of Liverpool they found from the evidence that the deductions might vary, not according to the class or description of property, but according to the parish or township in which it was situated, from 1 up to 20 per cent. These were the views upon which he opposed the Bill; and if he were to go a step further, he should say that if they carried it, they would be making an absolute injustice by Act of Parliament. There were so many considerations which varied the real nature of property, such as position, age, use for which it was adapted, &c, that they could not legislate generally upon it. For the reasons he had given, he was sorry to say he could not assent to the second reading of his hon. and learned Friend's Bill.

SIR JAMES FERGUSSON

said, that the great principle of the Bill was to assimilate the law of Scotland to that of England in reference to the subject in question. He did not consider the measure at all so unreasonable as the Lord Advocate seemed to suppose. The people of Scotland were much indebted to his right hon. Friend opposite for that most valuable measure, which had been enacted some few years ago, for the establishment of the valuation roll, by which the annual value of all property in the country was recorded in the clearest manner. That measure would ever be honourably associated with his name. But so far from this Bill tending to interfere with the operation of the measure of 1854; he (Sir James Fergusson) ventured to say that it would remedy the few little defects of that Act. The grievance complained of by various interests was that the gross assessment was made, not upon the clear annual value of the property, but upon the value determined by certain deductions. His right hon. Friend had characterized the whole system of local taxation, whether in Scotland or in England, as something approaching to barbarism; but it should be remembered that, though there might be some things incidental to local taxation which might be anomalous, still there was much that was anomalous that was found convenient in working; and it was not sufficient to condemn a system to say that it was not formed upon the utmost conditions of symmetry and theory. Was it better to sweep away the whole of an existing system, or to alter it where alteration was necessary? He thought it was better to make the necessary alterations. He could not believe that the House would legislate in an exceptional manner with regard to Scotland in this matter. In 1865 the subject was examined by a Select Committee, and if the evidence then taken was insufficient, it was the duty of the Government, who were represented on that Committee, to have perfected it, and not now to complain, when the Report was being considered, that the evidence was partial. Various skilled witnesses who were called before that Committee stated that they could see no difficulty in making these deductions, except in the labour which it would involve, and that difficulty would decrease each year as the system came into operation. He was surprised to hear his right hon. Friend state that the income tax was levied on the gross valuation, and quote it as a precedent for local assessments on the same principle, because it was well known that the income tax was levied on the net profits of railways, and not their gross earnings. A great injustice existed with regard to those descriptions of property. As to its being said that there was no dissatisfaction felt with the existing system, he admitted that the inconvenience only applied to particular classes of property; but the Bill would assimilate the assessment to the system which prevailed in England; and if it was thought right to continue the assessment on the gross valuation in Scotland, he wished to point out that there was nothing in the Bill or before the House which would prevent its being altered to that system. Nothing would be easier than so to alter that Bill in Committee as to empower the local authorities in each county to determine the rate of deductions which should be made from each description of property, when rated at its gross value for the purposes of assessment. It would only be necessary to leave out the second and third clauses in this Bill, and to make an alteration in the fifth and sixth, and the object would be effected—keeping the gross valuation as the basis on which the calculation should be made. The Committee in their Report had laid out certain percentages as grounds of deduction which appeared to him to be fair and equitable. He thought, therefore, that the Bill was well entitled to be read a second time; and it could only be refused on grounds which were not very popular in this House—the ground of perpetuating distinct and separate systems in different portions of the Empire.

MR. WALDEGRAVE-LESLIE

said, he was a Member of the Committee which sat last year. He could not but regret that the subject had again been pressed upon the attention of Parliament after what had taken place last Session. It appeared to him that the only mode of arriving at a valuation of property which should be at all satisfactory, was one that would rest upon the gross value. The Land Valuation Bill, which had been introduced by the Lord Advocate in 1854, had been attended with great advantages. He (Mr. Leslie) had watched with the greatest interest the working of that Act, both in his own county and in others, and he ventured to say that nowhere was its operation complained of. He would oppose the present Bill because he believed that it rested on an injudicious basis, and that it would work mischief.

MR. ADAM

said, that with the object of supplying an accidental omission on the part of the Lord Advocate, he moved, as an Amendment, that the Bill be read a second time on this day six months.

Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day six months."—(Mr. Adam.)

MR. BAXTER

said, that he was convinced, by the admirable statement of the Lord Advocate in 1864, of the propriety of making some such change in the law as that now proposed, and he thought it rather hard that the learned Lord should now, in a speech far inferior to that in point of argument, ask the House to reconsider that statement. The reply of the hon. Baronet (Sir James Fergusson) to the learned Lord's present speech was most satisfactory and conclusive.

SIR JOHN OGILVY

said, he was in favour of the principle of the Bill.

MR. GRAHAM

said, the hon. Member for Greenock alluded to only one source of opposition to his Bill—that of private companies—the fact was that the opposition arose from various sources, and, as far as he could understand, its advocacy came from one source only—that of the railway companies. If it was necessary, from the peculiar nature of railway property, that it should be subject to exemption from the general rule, by all means let their case be considered, and let a separate Bill be brought in for their interests; but why should the whole valuation system of Scotland be disturbed to suit their interests, when no other parties wished for a change? Far from there being one source of opposition only, he had himself been requested to oppose it on the part of the justices of the peace of the largest and most important county in Scotland, on the part of the corporation of Glasgow, the greatest and most important corporation of Scotland, and on the part of the Convention of Royal Burghs.

MR. DUNLOP

said, that he could not admit that the House was asked to enter upon a new course. On the contrary, they were following up the provisions of the Act, which took the valuation out of the hands of local bodies, and placed it in the hands of a general assessor appointed by Government. As the object desired was to ascertain the real value of property, he was not aware that that object could be attained in a better way than by allowing the deductions enumerated in the Bill.

MR. MACKIE

said, that the Bill was altogether uncalled for. It would, if passed, cause great dissatisfaction to people in the south of Scotland.

Question put, "That the word 'now' stand part of the Question."

The House divided:—Ayes 33; Noes 80: Majority 47.

Words added.

Main Question, as amended, put, and agreed to.

Bill put off for six months.