LAND VALUES (SCOTLAND). (Hansard, 13 May 1907)

THE LORD-ADVOCATE (Mr. THOMAS SHAW,), Hawick Burghs

in asking leave to introduce a Bill for the ascertainment of land values in Scotland, said the provisions of the Bill were of the simplest character, so simple as to prompt the hope that it would be treated as non-controversial. He might explain at once that the Bill was not a rating measure. Its provisions were concerned with valuation alone, and indeed it was expressly laid down that until Parliament otherwise determined, no person should be liable to be taxed or rated in respect of the entry prescribed by this Act. The Bill derived much of its simplicity from being founded upon the 647 existing law and practice in Scotland. It might assist the House and help it to understand the measure if he endeavoured in brief to explain what the law and practice was. In Scotland there had been since 1854, in every county or borough, a uniform system of valuation founded upon the system of annual rental, or upon the estimate of what the subject matter of the agreement would let for, one year with another. The valuation was an annual one. Its cash was provided for by the races, collected in the poor rate, and it was conducted by a body of assessors who were men of experience, skill, and capacity, and who formed along with their staff, locally and nationally, an instrument of acknowledged efficiency. By these men and their staff the valuation rolls were made up. In the early stages, these rolls contained five columns, viz., for the subject, the proprietor, the tenant, the occupier, and the yearly rental valuation. Very soon, however, it was discovered that the valuation roll might be useful for national purposes, by the insertion of further columns. Thus, under the County Voters Registration Act, 1861, Chapter 83, there was inserted a further column of feu-duties and ground values affecting the subject. Then in 1884, under the Representation of the People Act, 45 Vic. c. 3, two further columns were also inserted of inhabitant occupiers, who might be claimants under the service franchise. The annual valuation rolls formed the statutory basis of all assessment, and in later years had formed the statutory basis of enrolment for the franchise, and it might be said, without hesitation, that the scheme of the system had worked throughout the whole of Scotland with complete smoothness, precision and efficiency. It had never been repealed, it had several times been added to by Act of Parliament to the public advantage, and so the early plan of amplifying the valuation roll by the formation of additional columns was the plan which had been adopted in this Bill. An additional column was to be made containing entries under the heading of "Capital Land Values." In this column, and opposite each entry therein, would appear a statement of the capital land value of the subject, while the mechanism was the familiar and simple one he had described. The Government were well 648 aware of the importance of the addition which the Bill prescribed. The fact was that the basis of the annual return had been found in many cases to be a misleading guide to actual valuation. In some cases land was unoccupied, in others it was occupied by a return totally out of proportion to the return which reasonable use of the subject would yield. There were also, as the House well knew, amazing discrepancies between the value for assessment and the value for transfer. There was the consciousness that the difference had been largely created by the enterprise of the community; and there was finally the need of dissevering from land, as a basis for assessment, the buildings and structural improvements thereon, and so far encouraging instead of discouraging the latter. When he added that there were disputed propositions with regard to almost every item of this catalogue, the House would recognise the importance of the first step being confined to valuation alone. Section 1 of the Bill accordingly provided for the column and the entries mentioned, and the second section modified the existing Valuation Acts, giving powers to call for particulars applicable to capital value in the same sense as the existing section applied to annual value. There was the same duty upon the proprietor of making a return. The definitions to which much importance might naturally be attached were contained in the third section and would appear fully in the text of the Bill. "Capital land value" was in the Bill simply what the land might be expected to realise in the open market if divested of improvements thereon. The feasibility of the valuation had been proved by witnesses of the highest standing, and as to the risk of under-valuing which would always be put forward in such cases, although the Bill was not an assessing or a rating Bill, still the entries which would be adjusted after returns were made by the proprietors, would be public facts, and no doubt proprietors would be fully alive to the consideration that Parliament would be entitled to note these facts as a basis not alone for possible assessment but for purposes of transfer. The Bill did not apply to the lands and heritages falling to be valued by the assessors of railways and canals; in this respect it followed the recommendations of two Parliamentary inquiries. Both Parties in the State, 649 as indeed that day's Order Paper showed, seemed not unnaturally to be engaged in the same search, viz., for the broadening of the basis of taxation, and both parties would admit that it should be sought for without recklessness and with caution and care. It was in that spirit that he asked the House to give the Bill a first reading.

§ MR. A. J. BALFOUR (City of London)

said the right hon. Gentleman had made it quite clear, with his usual candour, that this Bill, although it might be merely a valuation Bill, was a Bill the whole interest of which was derived from the subsequent legislation which he hoped to be able to found upon it; and it would be, of course, quite impossible for the House, when it discussed the Bill upon the Second Reading, to forget that it was part of a general policy. On that general policy he did not propose now to say anything, but he would remind the Lord Advocate that if it could be shown that any scheme based on the taxation of land values really involved taxing twice for local purposes the same subject that would be a form of public spoliation; and that if it involved anything in the nature of the breaking of contracts in regard to town property between the man who had feued land and the man from whom it was feued that would be in the nature of public spoliation. The cost of the operation would be very great, and he hoped the Lord Advocate would give some estimate before the Second Reading of what he thought that cost would be. The distinction between the house and the land upon which it was built, and the additional value given to the land and house together by the work of the community, was not a value which could by any possibility and by any common sense be divided between the land and house. It was true that the land being built on, the land might grow or fall in value through no effort on the part of the owner. But whether it rose or fell in value, they rose together as one 650 industrial subject or fell as one industrial subject. The Lord Advocate must expect to find that, notwithstanding any doctrine he might oppose to the contrary, the Bill would be subjected to very critical examination. How he was to get a fair system of valuation without dealing with the railways was a matter on which he did not dwell now. He was aware the right hon. Gentleman had behind him on this subject the authority of a Select Committee of this House, but he would find that this was a first step in a policy which was to make it impossible for the owner of land to make such an arrangement with the feuer or hirer of land in Scotland as should relieve the owner of all liability for rates, while depriving the owner of all possible increase in the valuation in the land. If the Lord Advocate's policy was to make that arrangement impossible he would inflict a perfectly unnecessary grievance upon a very large body of owners and investors. Any such inequitable interference with the ownership of land must have the effect of injuring the community at large, and of benefiting nobody. Whether the right hon. Gentleman thought he had found an El Dorado of taxation by which municipal rating might be materially lowered he did not now question, but he wholly disbelieved this was an El Dorado. He did not think the right hon. Gentleman would get, even by the most reputable method of using this new valuation, all he expected, and if he did not tax the same subject twice he did not think he would get anything out of it. But that would be a subject for future examination. He really rose to point out that the Government were again embarking on a question of extreme difficulty which touched very nearly great interests, and affected adversely large masses of property invested by insurance companies, on behalf of every class of the community, and he did not think they were more likely to be successful in this new venture, than, so far as he could judge, they were in the ventures on which they had already embarked.