§ [SECOND READING.]
§ Order for Second Reading read.
§ MR. TREVELYAN (Yorkshire, W.R., Island)
said it was not his own good fortune but it was the misfortune of the ton. Baronet the Member for the Northwich Division of Cheshire which placed on him the duty of again moving, as he did last year, the Second Reading of this Bill. He was sure they all regretted—and no one more than himself—that the task should not have been undertaken by the hon. Baronet who was unfortunately absent owing to ill-health, and whose prominence in the business world would pre-eminently entitle him to deal with the matter. But he I felt that this question did not depend in any sense upon the personality of its advocates, for it was part of a great world movement in finance and it mattered very little what individual proposed or advocated it. It was, moreover, a topic of increasing interest in our own country and one which was every year supported more powerfully by the municipalities great and small. This was the fourth year they had brought this Bill before the House of Commons. They admitted that its subject was in some respects complicated and presented many practical difficulties which it would be necessary to solve if the measure became law, but they were certain that the basis' of their proposals was sound, and he hoped the House would send the Bill to a Committee in order that it might be thrashed out in detail.
In every important respect it was the same Bill as that which he introduced last year. Its main object was to make an assessment of the land values of our towns and urban districts, to place upon the rate-book a second column, which would consist of assessments at 3 per cent. of the selling values, and to provide that 208 where the new assessment in the case of any piece of property amounted to a larger sum than the present assessment on the annual value the rate should fall upon that new assessment. There was a small addition to Clause 3 to carry out what was the original intention of the clause, and an addition to Clause 6, as to which he would have to say a word or two later on. He might say to his hon. friends from Ireland that the promoters of the Bill had considered a proposition to include Ireland as well as England and Wales within its scope, but after consulting an hon. and learned Member sitting in that House, they had taken his advice that it would technically be too difficult to deal in the same Bill with Ireland, as it would require a variety of wording. They therefore hoped that their Irish and Scotch friends would continue to support the Bill on the understanding that the promoters wished to extend it, and would be ready to do so, to other parts of the United Kingdom as soon as there was an opportunity of bringing in a Bill on similar lines. This Bill was supported with practical unanimity by the local authorities of the United Kingdom. There were no fewer than 166 corporations or borough or town councils, 152 urban district councils, and 128 Poor Law authorities supporting it, and since the Bill was introduced last year the number of local authorities supporting the measure had been increased by no fewer than 205.
§ MR. TREVELYAN
said they had all passed resolutions in its favour, and in view of this fact it was useless for opponents to describe the Bill as revolutionary or subversive. He did not intend to argue that land reformers were inclined to regard the measure as the whole solution of the question. They considered it rather as the basis from which it was hoped the reform of the present system of local taxation would start.
He would like to say a word or two about the general principle that was involved in the Bill. Everyone at the present moment was beginning to say that the difficulties of our local 209 finance were as great as those of national finance. In his opinion they were even greater, because the whole of our local taxation was drawn from one and the same source, with the exception of some comparatively small national subventions. No one could say that our great wealthy towns could not afford the taxation which was at present levied—if it were levied in the right direction. The evil of the present system was that the rates to a very great extent fell upon houses and improvements. The assessments on which rates at present were levied contained, it was true, the annual letting value of the land. But in most cases more than half of the assessments from which rates were at present levied fell upon the value of improvements. This was specially true of those parts of towns where development was going on most actively. If they went into the outside parts of their towns they would find, taking the present assessments on which rates were levied, that the enormously greater part of the assessments—in many cases nine-tenths—were assessments not on land value, but on the value of houses and mills and of improvements on the land. In a great part of our towns there was a taxation from six to nine shillings in the pound, nine-tenths of which was upon improvements and houses which were put upon the land, and to many of them that appeared to be the real evil of the present burden of the rates. It was a flagrant and disastrous social evil and it seemed to bring them face to face with the actual reason for the overcrowding in their cities and towns. Why was it, when the poor were crying out for good houses and when they were paying exorbitant rents forbid tenements, that the building trade, where there was a great demand for houses as evidenced by the readiness to pay high rents, was seriously depressed? After all, the building trade had every advantage it could have. It had no foreign competition to face, it could obtain material very cheap, and there was no lack of demand for houses; but there was a lack of a supply because the supply was so seriously taxed.
He would like to quote from an interesting and important statement, made by one who knew more, perhaps, 210 about our town populations than any other man in the United Kingdom. He referred to Mr. Charles Booth, who had written recently on this subject, and who took an even more advanced view on it than some hon. Members who were promoting this Bill. He said—When for the advantage of the consumer' and in the interests of the towns, and of trade, the food of the people was relieved of a large part of the taxation it had borne, it seems to have been overlooked, or not fully foreseen, that the houses the people lived in were, or would come to be, even more heavily taxed than their food had ever been, and that free internal developments would be hindered by the peculiar incidence of this burden.What they thought was that if a measure of that kind were passed, and if the people in their towns were able to see side by side, the assessment of the permanent land value—and the value of the whole property, including buildings and improvements, they would realise how very much better it would be to gradually remove the present taxation on improvements and houses which Varied in proportion to the expenditure and enterprise of the person who made the improvements. They would see the advantage of substituting a tax on land value, the incidence of which would be much the same on all properties in the same quarter of the town, because the land values would be very much the same and would not rise in proportion to the amount of capital which was put into the land to improve it. This was the ultimate aspect of land taxation, but they did not want to hurry. It was too great a question, and this Bill did not go so far as that. There was another reason why houses were not erected as rapidly as the population required, and that was that land in the neighbourhood of towns was dear. It was to that question that this Bill was immediately directed. All they desired was to get land into the market for the purpose of developing the town. Land was a first necessity for any kind of living or industry. It was private property in all civilised nations, but still it did not cease to be a first necessity for everybody, and because it was a first necessity for every enterprise, the State was bound to see that it was used for the best purposes, while it preserved to private individuals the right to draw rent from it.
211 At the present time good agricultural land on which there was no immediate prospect of building could be sold for from £50 to £100 per acre, which represented from 3d. to 6d. per square yard. But the time came when that land was gradually converted into building land, and it was so converted because the towns had crept up to it, and not because the landlord, by any superhuman skill or industry, had brought the land nearer to the town. Every penny of the increased value was due to the exertions of others than the landlord, who was very lucky indeed to get that increase of value. Who could deny that a man who possessed agricultural land which he could sell for £50 or £100 per acre was exceedingly fortunate, when, owing to the development of a town, be was able to get from £200 to £300 for the very same property. Yet, as society was ordered to-day, the price of land before coming into the market for building land was enormously greater than the figures he had just given. He had asked men who had had to do with dealings in land what was the lowest price at which land came into the market round our great towns, and they had informed him that from £600 to £800 per acre, or 2s. per square yard, was about the lowest, but that the ordinary price at which it did come into the market was very much higher, and that it ranged from £1,000 to £1,500 per acre. He was putting out of consideration those tracts of land which were purposely kept out of use until the towns had developed round them—tracts for which the prices were enormously in advance of the figures he had quoted. Nobody who was arguing for the Bill would assert that individual blame attached to the landlord for charging these prices. It was a State-sanctioned monopoly which enabled them to bleed the people because of their very necessities. They did not, in the long run, expect humanitarianism from anyone. But it was not good for the people. It was their business to get land into the market at reasonably cheap rates, and they might be perfectly certain that landlords would get an increase on agricultural value, even if they taxed it as the Bill proposed to do. The difference between 212 the selling value of agricultural land to-day and the selling value of building land showed an enormouslv too great discrepancy, and, therefore, he submitted they ought to bring land into the market at a much cheaper rate.
During the last few months he had been watching the criticisms upon their proposals, and, he was sure that no one on that side of the House had any disposition to despise or neglect those criticisms. One thing said was that land was not kept out of the market, but he would like in that connection to quote from a letter which appeared in the Property Market Review, from the pen of Mr. Donald Dinwiddy. The portion he wished to quote was as follows—An estate in the outskirts of London, situate in an urban district, was purchased a few years ago, and its 'selling value' may be taken to be £15,000. The 'land value,' as defined by the Bill, would, at 3 per cent., be £450 per annum, and rates, at 6s. 8d. in the £, would amount to £150. The real annual value—evidenced by a grazing tenancy—is £60, on which the tenant pays rates, which after exemption of a moiety of the poor rates and three-fourths of the district rate, amount to £8 per annum. Under this Bill the unfortunate landowner would be mulcted in an additional £142 per annum for rates, whereas the present annual value and income is but £60.He noted in passing that the writer of the letter spoke of the landlord who had a property worth £15,000 as unfortunate.
§ MR. TREVELYAN
said that if £15,000 were not a mere speculative price the landlord ought to be taxed on that sum in order that he might be compelled to put the land to its proper use. It was no very great hardship to compel him to realise if the land possessed that real value, and he was acting in a grossly unsocial way in keeping it out of the market. The only possible argument in his favour was that he might have paid a speculative price for the land which could not be immediately realised. It had been suggested by the hon. Member for Leicester and others that if this tax were put upon developing land it would check land speculation. He agreed that it might do so, but he wanted to ask the House 213 was that really a harmful thing. It was perfectly true that under the Bill it would be of no use paying speculative prices for land which could not be realised, because any man who did that would be taxed on the price he had given, and it would be a luxury, which he would not be able to afford, to hold the land until its speculative value could be realised. Everybody who dealt in land now had come to be a speculator, And he would ask the House whether in the case of what he might call legitimate speculators, that was to say, the case of people who were ready to build at once, there would be any real injury to them. He admitted that the man who bought simply in order to sell at a higher price later on would be hit. If the House thought fit they could mitigate the fall by not bringing the Bill into full operation at once. There was no real benefit to the community in having pieces of land bought merely to be held for a possible rise. Genuine builders and building societies had now in a sense frequently to pay speculative prices, because they could not be certain of getting land when they wanted it at reasonable prices, and consequently they had to look ahead and make speculative bargains in land for use years hence. But they would not be seriously hit by this Bill. In some cases where they had bought land not yet ripe for building they might be hit; but on the other hand they would be immensely advantaged by the fact that they would be able to alter their whole policy of purchase, simply buying land shortly before they desired to build, with the certainty that the monopoly which now frequently prevented their buying would be broken, and that land would come into the market steadily at reasonable prices.
One of the most popular objections to the scheme was that it would cause open spaces to be sold. If its supporters believed the result of the Bill would be to provide less air for crowded populations and decrease the number of parks and open spaces they would regard that as a very serious objection. But they urged just the opposite. As long as the prosperity of the country continued our cities would continue to spread, and under this Bill they believed the cities would spread more rapidly, 214 and that the crowded populations would be less crammed than now in the centres of our great towns. At any rate, indoors the people would have more air to breathe. The number of parks and open spaces in great cities was largely dependent on the intelligence of the municipalities, but at present, however, active they might be in that respect, they were hampered at every turn by exorbitant and impossible prices constantly asked by private owners. The contention of the supporters of the Bill was that municipalities would be able to do far more in this direction if they could insist upon land coming into the market at reasonable prices. But there were cases in which the municipality might be unwilling to buy, while private owners were willing to keep open spaces for the public. To meet such cases there had been inserted in the Bill Clause 6, enabling such parks and open spaces to be exempted if dedicated under trust to the public use.
A large number of valuers and professional men connected with land held the view that this assessment of land could not be made, or that it would be too expensive for municipalities to undertake. A profession was always conservative and apt to take the view of the persons who chiefly employed it. This profession was always working for landlords and was bound, to take their view, not from prejudice, but because its work was always done from the landlord's point of view, and notoriously landlords did not like this Bill. On the other hand, those members of the profession who were in the same relation to municipalities as others were to private landlords were of opinion that the thing could be done. But a more material fact than the speculative opinion of the profession was the actual experience of those countries where the principle had been adopted. There had been absolutely no difficulty found in assessing land in many Colonies, Germany, and the United States; it had been done perfectly easily and, he believed, inexpensively. In Australia and New Zealand, where the system was in full operation, the clerks of the various municipalities which had adopted it all said, the same thing—that it had not increased and in some cases had decreased, the cost of assessment. Since 215 the war the principle had been adopted in Johannesburg. The municipality desired that the whole of the rating should be based upon land values, and not at all upon houses, but the Government of the Transvaal preferred that houses should still be taxed. The whole of the developing land was now taxed on its capital value. A year ago the boundaries of Johannesburg were extended from an area of nine square miles to seventy-five and a half square miles, mainly for the purpose of bringing within the area of this taxation large properties of undeveloped land of great value which were being held out of the market by companies and that object had been largely secured. An even more important case was that of the city of New York. In 1903 there was granted to New York a new charter, the object being to enable a more effective assessment to be made of the value of real property. It was not undertaken for the special purpose of taxing land values. In one year a new assessment was made of the land values of New York from one end of the city to the other, and he had with him the special record in which every price of property was assessed in two columns—one of the value of real estate unimproved and the other the value of real estate with improvements thereupon. It was a striking fact that the municipality did this not for the purpose of exempting improvements, but in order to make a more exact assessment of the whole of real property, and they would not have done it had it meant enormous expense.
In the face of these facts why should we be so timid about entering upon this policy? It might not be a complete scheme, but it did, at any rate, open the door to something like a final settlement, and it had the merit of being capable of indefinite development as the people of the country approved of it. It was impossible at a blow to alter the practice of centuries, or by a single stroke of the legislative pen to set up a new system of taxation, but the Bill struck at the root-evil of the present system, and would immediately result in an enormous reduction of the cost of the first necessity of life and industry, viz., land. Every year there was a stronger feeling that this proposal 216 deserved serious consideration and support; there were even members of the Government not hostile to it, and he hoped the House would, if possible by a larger majority than last year, pass the Second Reading, and permit the-Bill to be sent to a Committee upstairs for detailed discussion. He begged to move.
§ Motion made, and Question proposed,. "That the Bill be now read a second time."
§ MR. AUSTIN TAYLOR (Liverpool, East Toxteth)
said the mover of the Bill had not only admirably restated the case for the measure, but had dealt with objections developed in last year's debate and since. Seeing that the principle of the Bill had already received the approval of the House, what its supporters had to do to-day was not so much to restate their case as to listen to what fresh arguments might have been found to its practical application. He could not see how anyone who had been officially connected with the demolition of insanitary property could withhold his support from the essential principle of this Bill, which he took to be the separate assessment and ascertainment of land values with a view, if not to special rating, at any rate to the direct recovery from the owner of that portion of the rate which pertained to the land.
He had been concerned officially with the demolition of a block of insanitary property in Liverpool. He took the Government inspector to the property on a snowy day, and even his well-tried nerves received a shock. But the most striking feature was the position of the landowner. The property had been developed on a comparatively short lease. The houses had never been fit for human habitation, in fact, they ought never to have been erected, and the property was in a state of decay. The unfortunate occupiers and the still more unfortunate tenants had a certain interest in the transaction, and the authorities had a direct interest in getting rid of them both. But the owner of the land had contracted himself out of all that interest in the property which imposed duties and responsibilities. He received his 217 ground rents and in that sense sat at the receipt of custom, but he had no obligations, and within a comparatively short period would again enter into possession of the site. That did not seem to him quite a fair state of things between the owner of that land and the municipality. What was the position? The landowner had no possible motive in terminating the state of that property. He received what he was entitled to receive, namely, the ground rents, but the onus lay on the municipality of getting rid of the scandal. Of course, the first thing which they had to do was to buy the landlord out. He did not want to say that the landlord was exorbitant or unfair. His opinion was that he behaved as landlords generally behaved when they had certain property for sale, and they thought they could get the full amount awarded for it. It occurred to him that this was not a satisfactory state of things as between a municipality and the owners of the soil, and the position would have been improved so far as the municipality was concerned had some method such as that which was the essential principle of this Bill been adopted for putting the site under special assessment and for the direct levying upon the owner of the land of that portion of the rent which appertained to the value of the soil. Under such an arrangement the owner of the soil would have had an interest alike with the municipality, and he would also have been interested in getting rid of a state of things which ought never to have existed. It might be said that the landowner would contract himself out of that arrangement as he had done out of the previous one. That might be so between the people who wished to assert their rights and the individual owner who naturally would take advantage of the full limits of his ingenuity. But that was not a reason why they should refuse to take a modest preliminary by putting in a separate column the value of the land in urban communities and then they would have a direct interest in its proper treatment.
He did not want to follow his hon. friend in his treatment generally of this question. It was an extremely complicated subject, but he thought all hon. Members present would bear testimony to the ability with 218 which the hon. Member who moved this Bill had threaded the maze of an extremely difficult problem. He felt that such an adjustment as was proposed by this Bill was very desirable. Land was a much truer barometer of value than the buildings upon it, and that was an essential truth which lay behind the principle of this Bill. Land might be put to its full use or to its stultified use, or it might be withheld from the requirements of the community altogether; but its value could easily be ascertained if the will to ascertain it was there. Its value was a truer barometer of the needs and of the prosperity of the community than anything else, and he felt quite sure that before they finished with this question they would come to the conclusion that it was the truest basis of assessment and value. This Bill was an attempt to adjust matters between the different groups of occupiers and owners. He took it that was all it contemplated, namely, the bringing into rating of land which today was either wilfully or by neglect not properly developed, and therefore not bearing its true proportion of the common burdens of the community.
He felt that the details of this Bill were open in some respects to objection, but that was to say no more than in the application of any principles there would always be some objection. It was quite impossible in any field of human activity for human thought to grasp or advocate a principle of any kind without being immediately confronted with enormous practical difficulties in carrying it into-effect. They did not decide for or against the principle altogether because it was difficult of application, but they decided for it on grounds other than that, and in this particular case, certainly, he felt that upon the question of land values and its assessment for rating they could embrace the principle and leave the practical application to be settled after the principle had been affirmed.
There was only one other point, in conclusion, that he wished to touch upon, and it was one which he knew had excited some comment in Liverpool. He alluded to the non-disturbance of existing contracts. It was, of course, well known that in the earlier 219 stages of this Bill it was proposed to interfere with existing contracts.
§ MR. AUSTIN TAYLOR
said at any rate it was quite clear that it was proposed in this Bill to leave existing leases and agreements undisturbed. It was, of course, felt by many occupiers who had developed properties upon short leases that it would be extremely hard upon them if at any time they were called upon to pay a special rate for a site value which they were perfectly incapable of recovering from the owner until the lease had expired. In the interval, having already agreed to bear the whole burden of the rates from which the owner was exempted himself, and having had to bear the enhancement of rates not anticipated, it was natural they should feel it hard that a Bill directed to recovering from the landowner should land them or run the risk of landing them into a special rate upon land values. He only mentioned that point because he thought the promoters of this Bill in the House of Commons would be only too willing to safeguard them against any injustice of that character, and he felt strongly that if at any time in the development of land this injustice arose it would be perfectly possible to readjust matters by giving them the relief which would inevitably arise upon the buildings and other properties which would to that extent be relieved. He only mentioned that point, and it did not in the slightest degree qualify his support of the principle of this Bill. He trusted that the House of Commons would once more affirm this principle, and he believed that by so doing they would be affirming a principle which was of vital consequence to our large towns, a consequence which those towns had shown themselves fully cognisant of in the resolutions and decisions which they had adopted by large majorities.
§ MR. REMNANT (Finsbury, Holborn)
said he congratulated the mover of the Bill upon his great luck in winning the place in the ballot which had enabled him to bring forward this most interesting 220 subject. He congratulated him upon his good fortune, and although the hon. Baronet who drew first place was not able to be present, still there was great compensation for this in the knowledge that the Bill had been moved by the same hon. Member who moved it last year. He did not think, however, that they could congratulate the hon. Member upon bringing in precisely the same Bill as last year, because, with the exception of one or two trivial alterations, he had made no allowance for the criticisms passed upon the measure upon the last occasion, and which in his opinion were worthy of every consideration. In spite of this the hon. Member had brought in a Bill without any alterations whatever in the direction of meeting the objections raised when this matter was last discussed. The hon. Member had made an extraordinary mixture of personal and real property. If in the case of shares a large increase of value took place he supposed the hon. Member would have no objection to that, although he did object in the case of other property. He supposed the hon. Member had gone through the Hansard record of last year's debate, and had taken out the points which he thought worthy of consideration. He might say that he had done the same thing, and although he stuck to all he said last year, he was sure the House would not wish to hear a repetition of what took place upon that occasion. Therefore, he would endeavour to confine himself to any new objections which he had to the Bill as it was introduced to-day.
The hon. Member who moved this measure had rather twitted them upon the fact that while they opposed this Bill they had nevertheless supported the Agricultural Ratings Bill. He did not think that charge of inconsistency could be properly supported on this occasion, because the legislation that took place in reference to the rating of agricultural land and tithe rent-charge was based upon a special interim Report made by a Commission which dealt with that subject. He would like to refer to the second Report dealing with agricultural depression in which special mention was made of the grave condition 221 to which agricultural interests had come, and speaking of relief urged that measures should be taken without delay, and that although legislation could not be carried into effect in connection with the financial arrangements of that year, declared that something ought to be done, and at once, in each of the directions suggested, to mitigate, if possible, the deplorable results and to arrest the progress of the depression. But the Bill as submitted to the House flew directly in the face of the Report of the Commissioners upon Local Taxation. Even the Minority Report on ground values advocated an owner's site value rate only as a "make-weight" to accompany "increased provision made by the State in aid of services locally administered." And, again, the Minority Report justified a new charge, on the ground that it would be "counterbalanced by the relief proposed to be granted in the shape of increased subventions." The Amendment, on the other hand, was strictly in accordance with the recommendations of the Royal Commission. The Commissioners pointed out that, while personal property subject to Imperial taxation was about three times as great as real property so taxable, the non-rateable property contributed to local objects—if elementary education was excluded—only a little over 6 per cent, of the whole expenditure, and nearly 83 per cent, fell on the rates. In order to relieve this inequality the Report proposed that there should be an in-. creased payment from death duties on personalty for local purposes; that the transfer of trading licences and of establishment licences should be made complete, and that power should be given to increase their amount; while the assignment to local purposes of a fixed portion of the income-tax was said to be deserving of consideration. The terms of the Amendment were borrowed from Lord Spencer's recent letter on the policy of the next Liberal Government. Lord Spencer in that letter said—I wish now to deal with the whole question of taxation and local rates. In my opinion the legislation of the Government on this subject was entirely wrong. It favoured one class at the cost of the whole country and neglected many parts of the problem, and I am confident that the proper mode of treating this subject will be to introduce as far as possible a broad 222 and comprehensive measure to deal with the whole basis and incidence of taxation and rating which both in town and country now are antiquated and need drastic reform. The one object to be arrived at is not piecemeal and partial treatment, but such legislation as will secure fair and equitable results to all classes of the community in the financial burdens which as citizens they must bear.[Cries of "Hear, hear!"] He was glad to hear those "Hear, hears" on the other side of the House. He hoped that an Amendment which carried with it the approval of both sides of the House would when put to the vote be carried unanimously. It seemed to him that it was significant that in that letter Lord Spencer laid down a principle which was often enunciated by the late Lord Salisbury. Speaking at Nottingham on November 26th, 1889, Lord Salisbury said—The danger of all interference with rates, as anybody who is acquainted with parochial life must know, is that there is nothing so likely to set society by the ears, and an attempt to revolutionise the principle on which we have conducted the levying of our rates ever since the days of Elizabeth will be an exceedingly dangerous and difficult task. But, if it is ever attempted, we must deal with a great injustice which is inherent in the rates, and settle that. I refer to the distinction that is made between real and personal property. It is not in itself just that if I possess £100 a year in the Funds, I should go entirely without any taxation whatever for the support of the poor, or the education of the poor, whereas if instead of putting that £100 into the funds, I put it into land or houses, I snail pay a tenth part, or a fourth part, of my income for the support of the poor and for the support of education. The thing is utterly unjust. Nothing but mere use would have induced us to submit to it so long, and if any great revolutionary statesman is coming who is to take the whole thing to pieces and set it up on the most approved philosophical principles, the first thing he must do is to see that personal property should pay its share of the rates as well as realty.That was the opinion of the late Lord Salisbury in 1889, and it appeared to be the opinion to-day of Lord Spencer and a great number of hon. Members now in the House. The excessive strain upon real property under the present system had lately been described by Sir Robert Giffen. He would read Sir Robert Giffen's words—Speaking in round figures, we may say that about £240,000,000 of income from real property have to bear a charge of close upon £60,000,000 of rates … In addition the property has to bear a further charge at present of over £7,000,000 for income-tax, at the rate of 223 Is. per £. There are, besides, the death duties. There is no doubt that this combination of charges is so high as to deprive the country of the financial reserve it ought always to possess in its real property specially, as well as in the incomes generally liable to income-tax. The nation is now so tightly bourd that the taxable resource furnished by real property has no elasticity,While the Amendment was thus supported by the highest official, political, and financial authorities, no such authorities could be cited on behalf of the piecemeal and partial legislation proposed by the Bill. The Bill was no doubt supported by a large number of municipal authorities. Hon. Members had recently received a circular showing that a large number of corporations supported the Bill. The hon. Member who moved the Second Reading said that in all cases resolutions had been passed in favour of the Bill. He himself had not gone through the whole list, but it struck him that the action of one corporation, namely, that of Stockport, did not altogether bear out the statement of the hon. Member. The following appeared in the Manchester Guardian, January 5th, 1905—Yesterday Stockport Town Council discussed the rating of land values. Mr. Alderman J. Turner proposed That this Council expresses its approval of legislation for the purposes of rating and taxing land values, and hereby requests the borough representatives in Parliament to ballot for a Bill with those objects.' He urged that the trend of recent legislation had been to cast burdens upon the industrial community which were fast becoming intolerable. The taxation of land values would be such a fiscal reform as this country had not seen since the repeal of the Corn Laws; indeed, it was a necessary corollary of free trade.Mr. A. Glithero seconded the motion, and referred to a farm in Stockport which some years ago was let at a rental of £60 per annum, and from which now, the land being covered with buildings, there was received in chief rents £663 a year.Mr. A. Briggs opposed the motion, contending that it was a question bristling with difficulties, and that it should be left to the Imperial Parliament without pressure.The motion was defeated by 25 votes to 15.
§ MR. TREVELYAN
I was told yesterday that the list was up to date in December. There may have been one or two alterations since.
§ MR. REMNANT
Nobody doubts for a moment what the hon. Gentleman says, but the report I have read shows, 224 at all events, that the list is not absolutely reliable.
§ MR. TREVELYAN
It is reliable up to December. Of course it is obvious that one or two municipalities may have changed their opinion one way or the other,
§ MR. REMNANT
It is only a small matter. There waalign="center"s no resolution passed up to December in Stockport. [AN HON. MEMBER: Yes, previously.] According to the extract I have read from the Manchester Guardian Stockport at the present moment is not in favour of the principle of the Bill.
§ MR. REMNANT
said the town council decided by a majority that it was not a question which they could' properly discuss. There were, no doubt, a large number of municipal authorities in favour of the Bill, but there were also a good many who were solid against it. It was only natural that such bodies should welcome a scheme which promised to supply them with fresh funds at the expense of a minority of the population, thought it was more than doubtful whether it was to the interest of the ratepayers that their representatives should be encouraged to engage still further in hazardous commercial enterprises without in the first instance appearing to raise the rates. In point of fact, however, municipal authorities were by no means solid for the Bill. Neither the City Corporation nor the Westminster, City Council supported it, and various provincial authorities, including the Somerset County Council and the Town Council of Stockport, had definitely refused to support it. Even in the case of those municipal bodies which had passed resolutions in favour of the separate assessment of land values, important minorities had dissented. The London County Council had again and again passed resolutions on these lines.
§ MR. BENN (Devonport)
May I remind the hon. Member that the London. 225 County Council most emphatically approve of the separate assessment of land values, and that they have reaffirmed that by overwhelming majorities.
§ MR. REMNANT
said that the separate assessment of land values was explicitly condemned by the late Lord Farrer and the late Lord Hobhouse. When authorities were cited on an intricate economic problem, names should be weighed as well as counted. Even the supporters of the Bill would probably admit that in such matters the opinions of the late Lord Farrer and the late Lord Hobhouse outbalanced the opinion of a very large number of other County Councillors. The foreign precedents cited in support of the Bill were misleading, being drawn from countries where, unlike England, a fair contribution was made by personal property to the rates, whereas the Bill proposed new burdens on land without any contribution from personalty. In the United States land was taxed on its capital value, but personalty was also taxed in the same way. This was fair and equal: the Bill was unequal and therefore unfair. In German towns, again, local taxation was based on incomes. Dr. F. P. Koenig, H.B.M. Consul at Diisseldorf, wrote in a etter dated March 1st, 1905—Local rates are raised by the local authorities based OR the income-tax paid to the State. Here 14 per cent, of the State income-tax is paid in local rates.That pretty well expressed his views on this subject. It was not that real property should escape taxation; but that there should be an equal contribution between real property and personalty. France was referred to last year. In France a very large contribution was made from personal property to the local rates by means of the Octroi duties. The hon. Member referred to the colonial precedents, but these were equally irrelevant. The national land tax in New Zealand was, as Mr. Pember Reeves pointed out in his book entitled "State Experiments in Australia and New Zealand," only a form of income-tax, land being there exempt from the income-tax paid by personalty. It was true that rates were levied on land values in some Australasian towns, but Australasian legislation, unlike the Bill, left 226 landlords and tenants free to make their own future contracts with regard to the payment of the rate. That was, he was quite sure, admitted to be fair by all economists. The Acton Express (January 31st, 1903) published an official correspondence between the Vestry Clerk of Acton, Mr. W. Adam Brown, and the Town Clerks of Brisbane and Townsville (Queensland), and Palmerston North and Wellington (New Zealand). The Vestry Clerk of Acton asked for answers to eight questions, one of which was—In the case of rented premises, leaseholds, etc., who pays the tax?The letter received from Wellingto left this question unanswered; but the letters received from the town clerks of the other three towns answered it as follows—The occupier, unless under agreement with owners."—(Town Clerk of Palmerston North.)Entirely a matter of arrangement between landlord and tenant, though the tenant is primarily liable."—(Town Clerk of Brisbane.)The occupier is liable in the first instance, but, unless there is a special agreement to the contrary, he can recover the amount from the owner."—(Town Clerk of Townsville.)In his opinion the advantages claimed for the Bill broke down as completely as the alleged precedents on examination. Thus it was said that land benefited by public improvements would be reached by the Bill. Had those who argued thus ever heard of the "recoupment" principle, under which the municipal body which carried out an improvement acquired the neighbouring land which was expected to be benefited by the improvement, and so took the whole of the increased value for the public? This principle was applied by the late Metropolitan Board of Works with brilliant success in the case of Northumberland Avenue.
§ MR. REMNANT
said that that was the leading case where a well-managed scheme resulted in a great success; but would the hon. Member for Devonport give the House some information as to what was happening in regard to the great Holborn to Strand improvement, where the London County Council 227 did buy sufficient land on both sides of the area? He believed that either from want of management or from the onerous conditions imposed, the success of that scheme was anything but great. As regarded this Bill, it was quite true that the present system of allowing for repairs on a uniform basis in the assessment of property, instead of discriminating between the varying expenditures required for repairs according to the character and condition of each property, was unsatisfactory and called for radical reform. But the remedy provided by the Bill (Clause 5), which the hon. Member for the Elland Division of Yorkshire described in the debate on the Land Values Bill of last year, as he was reported in Hansard, as a "rough and ready differentiation," was not only cumbersome and expensive but obviously imperfect. Thus under the Bill there would be the smallest allowance for repairs where sites were most valuable, so that in all cases where the site value increased, there would be a smaller and smaller allowance on account of the repairs as the buildings got older and older and the repairs cost more and more. A far simpler and more perfect remedy was to make the allowance for repairs correspond with the actual circumstances of the property. There was no sort of difficulty about this, as the calculation was only one of the kind which surveyors were making daily, viz., to estimate in the case of a particular house the difference of the rental value under a repairing as compared with a non-repairing lease. It was in truth difficult to name any class of persons who would really and in the long run be benefited by the Bill.
Even the apparent gain to municipalities would prove a complete delusion. If they looked to occupied houses, there was no land value which escaped assessment under the ordinary law, as under the present system the burden of the rates undoubtedly really came upon the landlord. This was the view not only of high financiers like the late Mr. Gladstone and Sir Robert Giffen, but of practically the whole body of land surveyors and others who had actual experience in such matters, including the London County Council's own valuer, who, speak- 228 ing on this subject some time ago, said that the—Burden of rates fell entirely upon the owners of property and for the most part upon the owners of land.This subject had been inquired into at great length both by the Town Holdings Committee of the House of Commons and by the Royal Commission on Local Taxation, and at the conclusion of these inquiries not one member of the Committee, not one of the Royal Commissioners, was found to deny that rents were affected by the agreement of tenants to pay the rates. The municipal authorities could, obviously, gain nothing by a clumsy system of rearranging charges upon those who, in fact, already bore them. If this principle was borne in mind it would be seen, further, that even the rating of vacant land and the sites of empty houses would ultimately confer no benefit on the ratepayers. The effect would be only to relieve the owner of occupied land of some part of the rates, and to cast that part on the owners of unoccupied land. The present practice, under which owners were taxed when they had income out of which to pay the taxes, was obviously more convenient to them, and did not ultimately cause any loss to the public.
It was said that the community might gain by compelling an owner who was "holding up" land to bring it into the market. Obviously, the object of an owner who kept his land out of the market was to obtain a greater price for it at a later date when the value had gone up. Of course, he might have miscalculated his chances; but in most cases the principle of self-interest might be trusted to act, and in the long run he would make a gain. The supporters of the Bill forget that in this matter the interests of the municipality and the owner were identical. If the owner did better for himself by waiting, the municipality also did better, because it got proportion ately higher rates, e.g., if a man owned vacant land on which a house could be built commanding an immediate rental of £50 a year, whereas in twenty years time a house commanding a rental of £100 a year could be built on the same site, the municipality should encourage 229 the owner to wait. It paid the municipality much better to get the rates on £100 a year, beginning twenty years hence, than to get rates on only £50 a year, beginning at once. One was not impressed by the Marco Polo stories of the marvellous additions which would be made to the rateable value of Finchley and other localities if vacant land were rated. A surveyor could estimate with reasonable accuracy the market value of a particular plot of land. It was a totally different matter to estimate what would be the value of vacant land if the whole of the vacant land in a suburban or semi-rural district were treated as available for building at the same moment. In the latter case, the disturbance of normal market conditions would be enormous, and, though no doubt the valuers who had prepared such estimates for the English League for the Taxation of Land Values would say that they had allowed for this, there was no evidence that their allowance was adequate. One might be sure that if one of these estimates were submitted to an impartial arbitrator, and if, say, one of the many distinguished legal luminaries in this House were retained to cross-examine the valuers on behalf of the owners, a very different estimate would emerge. There were some points likely to escape the valuers which would be brought out in cross-examination which would lead to a very different result so far as the owners were concerned.
It was said that the rating of vacant land, by bringing more land into the market, would assist the housing of the working-classes. Those who argued thus forgot that the promoters of the Bill had ingeniously frustrated any such effect of a rate on vacant land by providing also for a rate on the sites of houses vacant. What was the object of imposing a rate to induce the landowner to provide more land for building if, at the same time, they deterred him from building on the land, when it was provided? Those who drew glowing pictures of the advantages of taxation of vacant land should remember that no such advantages had attended the system in America, where it had long been tried. Dr. Alfred Russel Wallace, who, as President of the Land Nationalisation Society, should be 230 an acceptable authority to some hon. Members on the opposite side of the House, on his return from a visit to America in 1887, gave an address on November 1st of that year, in which he pointed out that every particle of land, whether built on or not, was taxed on its full selling value. He went on to say—The results are very curious. To begin with, laud speculation, which we think is bad enough with us, is but a trifle here compared with what it is in America. In America, land speculation is everywhere excessive. It is the great mode of making money, and it exists more or less all over the country wherever land is for sale and is not monopolised by great capitalists. This taxation on full values, however, usually causes very rapid changes of ownership. Men buy land on speculation for the purpose of selling it again quickly. They will not hold it long, because, if it is not used, the taxes will eat it up. Then somebody else buys it and sells it again pretty quickly, and thus land is continually changing owners until it is used for occupation or cultivation or for building. But the result of this rapid change of ownership—of each person trying to make a profit—is that land very rapidly acquires in America a price as high as in old settled countries like England and very often even higher. … Then, again, the result of these speculations is that in the cities—in the suburbs of the cities, in the places where working men live, we find the land cut up into still smaller strips than in England, and the houses are built still more closely together. … Notwithstanding all the great advantages they possess, we find houses crowded together, rents enormously high, and no gardens to the houses. One of the most disagreeable features of American houses to Englishmen is that there are no gardens."—("Land Lessons from America," published by the Land Nationalisation Society, pp. 9, 11, 12.)Some of the evils which Dr. Wallace found in America, were already making themselves felt in Paris, where the rating of vacant land had recently been introduced. Justice, the organ of the Social Democratic Federation, said (October 26th, 1901)—The taxation of land values is a favourite Radical panacea for political ills. We have frequently pointed out how little such a mere burden-shifting measure could do for the working class, and that it was of no practical importance to them. Under certain circumstances, however, it appears that the taxation of land values may actually become a real hardship to the common people. Recently the Municipality of Paris has decided to tax all land not built upon. The consequence has been what; land-taxers would anticipate in such circumstances, that open spaces which were private property, but which were enjoyed by the people of Paris, are now to become the spoil of the jerry-builder. M. de Franqueville, for instance 231 the President of the Academy, the proprietor of the exquisite park 'La Muette,' with its historic fame, was notified that he would have to pay 80,000 francs taxation for it. He did the only thing in his power, and has ordered that it should be sold out in lots, as he could not pay £3,000 a year for such a luxury and freely offer his hospitality to the Parisians. No doubt our single-taxers would acclaim such results as great and glorious victories for their principles, as the imposition of the tax had led to the owners having the land built upon, instead of keeping it as pleasure resorts for the public. But nobody but the owners will benefit by the change, and even if they had not handed their land over to the jerry-builder, to add to the already crowded state of the city, it would simply have meant that it answered their purpose best to keep it unoccupied. The sensible thing for the Paris Municipality to have done would have been to acquire the land for public use, or to exempt the owners from the tax so long as they allowed the public the use of their parks. As it is, the experiment has shown that the taxation of land values will not abolish landlordism, and may easily intensify its evils.Some of the dangers of rating vacant land were clearly pointed out by the Local Government and Taxation Committee of the London County Council in old days. A Report of that Committee dated June 26th, 1891, signed by B. F. C. Costelloe, chairman, made the following admissions—'We doubt, first, whether it is possible to force the land market by the indirect agency of rates upon landowners. It is the interest of landowners to bring their land into profitable occupation as quickly as they can; and it is especially the interest of the present possessors of land in settlement or in mortmain. There is no evidence that they do not follow that interest; some of them are only too hasty in doing so. Mr. Vigers tells us that London is overbuilt periodically every seven yeais. We doubt, secondly, whether, if the land market could be artificially forced by a system of rating, it would be found of advantage to Londoners; seeing that land would be covered which might have remained longer open, a number of houses would be built without the certainty of occupants and would be built cheaply and flimsily, and would remain empty, and would decay. Such a result would injure the neighbourhood, and would not benefit the rates.
§ Message to attend the Lords Commissioners.
§ The House went, and, being returned,
§ Mr. SPEAKER
reported the Royal Assent to—