LAND TAX ON SMALL PROPERTIES. (Hansard, 17 March 1893)

§ MR. FRANCIS S. STEVENSON (Suffolk, Eye)
rose to move the Resolution standing in his name, as follows:— To call attention to the variations in the incidence of the Land Tax on Small Properties; and to more, That, in the opinion of this House, no increase of the Land Tax on Small Properties should be permitted to arise out of the reduction of valuation in the case of large holdings situated in the same parish; and that the time has arrived when the whole subject of the incidence of the Land Tax in various parts of the country might with advantage be re-considered. 438 He said he would only address himself to the Resolution in a few words. Although the Resolution was divided into two parts, it would be found that one bore strongly upon the other. He had to ask the House to go back to the origin of Land Tax, to the Tudor subsidies, and to the Commonwealth monthly assessments. Both these included, to some extent, what was known as the quota system. A law was passed in 1656 by which the specified sum charged upon a particular county was so levied on the general divisions, hundreds ridings, wapentakes, and parishes for all their real and personal estate. This provision was re-enacted in subsequent Acts. In 1692 real estate, offices, and personal property were under the head of this taxation. Offices and personal property gradually fell out, and the tax on offices was finally repealed in 1876, that on personal property having been repealed in 1833. No proper Returns were made in 1692 for the purpose of valuation. The partisans of William were liberal in their Returns; the partisans of the Pretender were niggardly. The centres of wealth and population were different then from what they were now. When, in 1798, Mr. Pitt made the Laud Tax perpetual, the Commissioners were directed to be governed in their assessments by those made in 1692, and so it was that the quota fixed upon the parishes and places under the Act of 1798 was, with few exceptions, the same as that fixed at the time of William and Mary. The result was somewhat startling. The new dynasty was in 1692 only four years old, and the tax was looked upon as a new and revolutionary one. And it happened that districts which favoured the House of Orange assessed themselves equitably and fairly, while those districts which favoured the Pretender assessed themselves inequitably. There had, however, been no change from the assessment of William and Mary, with the result that some centres of population and wealth and agricultural districts at present had to pay more in taxation, while London, Lancashire, and Yorkshire, which ought to pay more, were exempted from paying a fair amount of the burden of public taxation which, in equity and justice, 439 they ought to bear. In order to show the need for a re-valuation as between different parts of England, he would refer the House to the evidence of Mr. Wood, Chairman of the Board of Inland Revenue, before the Committee on Agricultural Depression in 1836, and some cases of inequality of the incidence of the tax. Lewes, for example, paid 2s. 3d., while Brighton paid less than ¼d.; Lancashire paid £20,000, while Suffolk paid nearly £50,000, and Norfolk £84,000 a year. Surely there might be a means devised of imposing the tax according to an ad valorem system instead of hard-and-fast quotas. He could quote other cases; but he thought it would be admitted, from the figures he had given, that the agricultural districts generally paid far too much. The Inland Revenue Report for 1870 told them that— Through Mr. Pitt's unfortunate resource of 1798, perpetuating the assessment of 1692 (or nearly so), the impost has assumed a form which is almost grotesque, so great have been the changes, more especially since 1798, in the relative valuation of the different districts in which the country is divided. And, again, it was stated that the Queen's Bench of 1853 decided that the quotas for the parishes were fixed and could not be altered. The Report went on— The parishes have to pay each its own rent-charge, and all that, this Department has to do is to take care that they pay the proper amount With the mode in which they raise the money we have no concern whatever. That, in itself, was an anomaly. Mr. Wood declared, in his evidence before the Court alluded to— The circumstances of Liverpool are these: The quota unredeemed is £99 and some odd shillings; the rental is the basis of the rating, and the sum to be levied in the £1 is something less than one-third of ¼d. annually and the consequence is that a rate is made, I believe, every three years, of ¼d., and the expense is probably three or four times as much as the sum actually raised, because all the forms of assessment of the Land Tax, all the duplicates, all the payments into the Exchequer must go on with as much regularity as if they were £100,000 per year. Mr. Wood, being asked what objection he anticipated to the equalisation of the Land Tax, replied— It may, probably, be argued that by the Act rendering the quotas perpetual as fixed in the year 1798, subject to redemption, an implied pledge was given that no alteration would be 440 made in the appointment of the tax on the several districts and parishes. There is nothing, however, in the law which bears this construction. He went on to say— There is one great objection to the altering of the Land Tax at present and equalising it—that is the expense which it is apprehended might be thrown on the districts by taxing new valuations. But this objection had been removed by the valuation of property made throughout the Kingdom for the purposes of the Poor Law Amendment Act and by the Returns for the Property Tax. According to Miller, in his preface to his work on the Land Tax, published in 1849, and still a work which was regarded as an authority on the subject— Although the assessments were originally calculated at a rate of four shillings in the £1, to which all real property is now legally subject, an equalised rate of 9d. m the £1, even after deducting the amount redeemed, would produce an increase to the Revenue of 1½ millions. Agricultural districts would obtain an immediate benefit. Of course, as Mr. Wood stated in his evidence in 1836— The law only affords protection from future assessments so far as regards the estates redeemed and exonerated. Pitt, in moving his Resolutions, said much the same thing. He said— If the whole of the Land Tax were to be redeemed, the only necessary to be provided as expressly as any legislation can guard is that, if ever a new Land Tax is imposed, it shall not be imposed upon those who have redeemed in any different proportion from that, or those who have not redeemed. It would be necessary to provide that the amount of what may have been redeemed shall be deducted from any new impost. In 1798 the Land Tax yielded £1,989,673. Since that time the Land Tax redeemed amounted to £874,750; and the present tax yielded about £1,000,000, the difference accounted for by the portion the tax relating to personal property and to offices having disappeared. What he (Mr. Stevenson) objected to was that there should be taxes raised with the mode of levying which neither that House nor the Board of Inland Revenue had anything to do. That, he held, was an obsolete and anomalous proceeding. It ought to be possible for that House to have something to do with the matter, and not leave it to the 441 Commissioners in their own localities, without any power of appeal as to the mode in which the tax was assessed and the mode in which the tax was levied. He had ventured to go into the quota system to show the inequalities which existed in the present system. The tax on the small holders had increased owing to circumstances over which they had no control—owing to reductions of rent and consequent reductions of valuation. He had letters from various parts of the country which showed that the grievance was not confined to any one part of England. One correspondent wrote— I am a working shoemaker, having managed to save sufficient to purchase a small house and garden 18 rods in extent. The collector for this parish has demanded from me the sum of 9s. fid. for the current year, whereas I have only previously paid 4s. 3d. I have received no notice of the increase, being simply told by the collector that it was a Government affair, and that if I did not pay my goods would be seized. Another wrote— I have four cottages in a certain parish. The rents were £14 and the Land Tax 7s. 4d. The rents have been reduced to £10, but the Land Tax is raised to 17s. In another case— I have eight cottages at £29 rent and 8s. 4d. Land Tax. The Land Tax is now £1 10s., although the rents have been reduced to £20. Another man wrote from Warwickshire that on most of the small holdings the collector had raised the Land Tax from 6d. to 9¾d. in the £1 for two years in succession. He added— There are old residents who have lived here for more than 60 years who have never been called upon to pay more than 6d. in the £1. There has been no fresh assessment in the parish. In most cases the difference was due to the difference in the assessment. I hold extracts from the hooks of Land Tax, showing the difference between the payments made in 1885 and 1893 in a parish of about 3,000 inhabitants. There had been a reduction on the large properties outside the town, but a considerable increase—in many cases a doubling—of the amount paid by houses in the town, which had not risen in value. One did not grudge reduction in the agricultural part, but one objected to the increase in 442 the small properties which had not done anything to deserve it. What he wanted to see was a fair assessment ail over the country—and a regular assessment. The want of elasticity of the quota lay at the root of the difficulty. It would be said, no doubt, that there was power of appeal against unfair assessment. That might be; but appeals from the Commissioners, so far us he could gather, only carried against double assessment, or against wrongful assessment—assessment, that was, in more than one place. The power of appeal to the Commissioners under 38 Geo. III., c. 5, s. 84, was rendered nugatory, partly because the Commissioners, owing to their qualification, were necessarily interested under present circumstances, and rightly so, in reducing the assessments on the large agricultural properties, and were, therefore, compelled to make up the quota from other sources—partly because of the burden of proof which fell upon the person aggrieved, but mainly owing to the fact that they were bound tore-assess it within the four corners of their district, which meant practically within the parish: whereas, if they had an ad valorem assessment instead of the quota system, no difficulty would arise. He thought the House would agree with him that the settlement of William and Mary was indefensible, and that, at any rate, some alteration was necessary in the direction, if nothing else could be done, of an automatic system of appeal. The Inland Revenue Report of 1870 said— We believe that in the great majority of parishes the Land Tax has been regarded for the last 70 years as a fixed charge on property, subject to which it has been bought and sold. What, then, must be the feelings of those who, having been accustomed to pay, say 10s., had the amount suddenly raised to £1? It was clear that the whole system of quotas would have to undergo revision. The House had in the last Parliament formally pledged itself to encourage as far as possible the creation of small holdings by the Small Holdings Act; but, as he had shown, the persons responsible for the assessment and collection of the Land Tax were doing everything they 443 could to throw obstacles in the way of that policy—a course of conduct which, in his opinion, should he discouraged by the Government and by the Board of Inland Revenue. This was a matter which had excited very considerable attention throughout the country. Resolutions on the subject had been passed by various County Councils throughout the country. The County Council of Norfolk asked that the Land Tax should be remitted and returned, but that was the last thing in the world which he should advocate. What he wanted was that there should be a revision of the tax in such a manner as that there would be a fair and equitable assessment of the tax all over the country. He did not suppose that the Chancellor of the Exchequer or the House would consent to part with such a valuable source of revenue as the Land Tax; but if the tax remained, it was only fair that the agricultural counties, which were the poor counties, should bear the least of the burden, and that counties like Middlesex and Yorkshire, which were the rich counties, should bear more of the burden than they do at the present time. He was sure that every hon. Member, on whatever side of the House he might sit, would agree that that was a demand that was not at all extravagant or unjust. He did not suppose that this was a question which could be forced on the attention of the Government without careful consideration; but at least he might be permitted to ask that the Government and the Board of Inland Revenue should give their attention to the subject, and that by some scheme an attempt might be made to remit the pre-sent inequalities of the tax and relieve the grievances felt by those valued and valuable members of the community— the small holders, whom it was the duty of the House to encourage, but whom the assessors and collectors of the Laud Tax were doing so much to discourage.

§ MR. CHANNING (Northampton, E.)
formally seconded the Motion.

§ THE CHANCELLOR OF THE EXCHEQUER (Sir WILLIAM HARCOURT,) Derby
I have listened with great interest and instruction to the speech of my hon. Friend. He has given us an able speech on a very important subject-He has called attention to the great anomalies caused by what is called the Land Tax. He says truly that the Inland Revenue have no authority in this matter, and this House does not exercise, in respect to the Land Tax, the authority it does exercise in respect to other taxes. The real solution to the difficulty is that this charge is not a tax, and has long ceased to be a tax at all. It retains a name which belonged to it properly two centuries ago, when it was imposed in the reign of William III. for the purposes of the great war. Since that time it has ceased to be a tax, and has become a rent-charge upon the land of the country. That rent-charge has, no doubt, now become quite unequal in its incidence in different counties, but it is not a tax. I want the House to understand that perfectly, for it practically explains all the anomalies to which my hon. Friend has referred. I do not wish to rest that statement on my own authority alone. It has always been the view that has been taken of the Land Tax. We have the authority of John Stuart Mill for saying that the Land Tax is not a tax, but a rent-charge; and that it is no more a burden upon the landlord than the share of one tenant in common is a burden upon another. The late Professor Fawcett also affirmed that the Land Tax should properly be considered as denoting that the State has reserved a small share in the pecuniary value of the soil. If you bear in mind that view of the Land Tax you will see at once that it is not a tax at all, and you will understand why the Inland Revenue has 445 nothing to do with it. The charge is in the hands of certain Land Tax Commissioners, who are appointed at the beginning of every Parliament by Parliament itself. I do not know whether my hon. Friend and the other County Members are aware that they themselves may be said to appoint the Land Tax Commissioners. I believe most hon. Members are not aware of that fact. The way in which it is done is by sending a circular round to the Clerks to the Commissioners of Land Tax, who submit the names to hon. Members for approval. I do not know whether my hon. Friend has received any such list of names. The present Commissioners were appointed in this way by the last Parliament in 1886. This is one of those obscure mysteries of the British Constitution which it is so difficult to explain, though, on the whole, it works well. To add to the anomaly, the Land Tax Commissioners, who govern the whole of the Land Tax, appoint the Income Tax Commissioners. That is a fact which is not generally known. I receive every day complaints of the conduct of the Income Tax Commissioners, with whom the Government has nothing to do, as they are appointed by the Land Tax Commissioners, who are in turn appointed by the County Members. Such a system, it will readily be seen, is likely to lead to anomaly. It has been suggested that a new Land Tax should be imposed on a different principle. That would be a great deal more effective. One of these days I shall be very happy, with my hon. Friend's assistance, to impose a new Land Tax, but on a different principle, and that, to my mind, will be a great deal more effective than endeavouring to tinker with this old Land Tax. We cannot equalise this old Laud Tax; it is impossible. A great difficulty in the way of dealing with the tax is that half of it has been redeemed. What are you going to do with the Land Tax where the tax has been redeemed? Besides, estates have been bought and sold subject to this charge, which, for the existing holders, is no burden at all. If a man has bought an estate and made a deduction of the purchase money equivalent to the amount of the Land Tax, of course it is not a burden upon him. That burden has been discounted for genera- 446 tions, and, therefore, it is not a burden at all upon existing landowners who have hled the land—they or their forebears—for generations subject to a charge for this Land Tax. I hope my hon. Friends, who have great questions before them dealing with the burdens on land, will clear their minds on this subject, and not make demands which would be fatal to the true principle upon which land taxation ought to proceed in the future. When my hon. Friend directed attention to the question of quota, he touched on a sore point. We have a fixed charge, and the question arises on whose shoulders it is to fall. That is left to the discretion of the Commissioners, who may change the burden so as to put a larger amount on one man than he bore before, and a less amount upon another man than he bore before. I ask my hon. Friends to discard the notion of equalising the present Land Tax upon different parts of the country. That is impossible We cannot do that with the present tax We may set to work to impose a new tax which shall be equal over all part of the country, but that must be irrespective altogether of the present Land Tax. The Land Tax is a rent due to the State or Crown. Any Land Tax, or charge upon land of the character of a Land Tax, must be a new tax in addition to the present tax. I do not know whether any of the hon. Members interested in agriculture and landed estates are disposed to support a review of the Land Tax. I should not be sorry to review the Land Tax; but if I were a representative of the lauded interest, that is exactly the thing I should not desire, because I do not think a revision of the Land Tax is likely to redound to their advantage. But the question of the quota is deserving of great consideration. I regard the Land Tax as a rent-charge due to the State, and it is the duty of the State to see that it is equitably levied in the districts from which it is due. That is the real point which my hon. Friend has made out; and as regards that point, I think it is a matter that is deserving of great consideration. I daresay it would be a difficult matter to deal with. I hope, however, that my hon. Friend will believe that I am not insensible to the case he has made out; that he will be satisfied with the assurance which I have given 447 on my part and on the part of the Government, and will consent to withdraw his Motion.

§ SIR CHARLES W. DILKE (Gloucester, Forest of Dean)
As one who has seen in the division which I have the honour to represent grave causes of grievance against the tax, I would advise my hon. Friend to be content with the statement of the Chancellor of the Exchequer and withdraw his Motion. The case is an extreme one. The hardship is great indeed. There are not many Members in this House who know how extreme the pressure of this tax is in certain parishes. I will just mention one case which has come under my notice. There is a small parish about three miles from Gloucester which affords a striking and interesting case of the injustice done by the tax. The parish is inhabited by small freeholders, who were planted there by Feargus O'Connor, and these men—40 or 50 in number—have had their assessments of Land Tax increased by more than double within the last year, after having remained unchanged for a long period. The House will see how extreme is the pressure of the tax on these small holdings. It is a great discouragement to these freeholders, and it prevents the sale of their properties, for there is no knowing how the tax might be further increased in the future. From that single case the House will see how urgent is the need for redress.

§ MR. F. S. STEVENSON
said that, after what had fallen from the Chancellor of the Exchequer and his right hon. Friend the Member for the Forest of Dean, he had no objection to the Motion being negatived, on the understanding given by the Chancellor of the Exchequer that this matter would receive the careful consideration of himself and the Board of Inland Revenue. When the Bill which had been promised by the Secretary to the Treasury came on it would be possible to raise this question in another form with advantage to the country.