§ The second proposal relating to land is the imposition of a tax on the capital value of all land which is not used to the best advantage. The owner of valuable land which is required or likely in the near future to be required for building purposes, who contents himself with an income therefrom wholly incommensurate with the capital value of the land in the hope of recouping himself ultimately in the shape of an increased price, is in a similar position to the investor in securities who re-invests the greater part of his dividends; but while the latter is required to pay income tax both upon the portion of the dividends enjoyed and also upon the portion re-invested, the former escapes taxation upon his accumulating capital altogether, and this although the latter by his self-denial is increasing the wealth of the community, while the former, by with holding from the market land which is required for housing or industry, is creating a speculative inflation of values which is socially mischievous.
§ We propose to redress this anomaly by charging an annual duty of ½d. in the £ on the capital value of undeveloped land. The same principle applies to ungotten minerals, which we propose similarly to tax at ½d. in the £, calculated upon the price which the mining rights might be expected to realise if sold in open market at the date of valuation. The tax on undeveloped land will be charged upon un-built-on land only, and all land of which the capital value does not exceed £50 an acre will be exempted, as also any land exceeding that value with respect to which it can be shown to the satisfaction of the Commissioners of Inland Revenue that no part of the value is due to the capability of the land for use for building purposes. Under these provisions all land having a purely agricultural value will be exempt.
§ Further exemptions will be made in favour of gardens and pleasure grounds not exceeding an acre in extent, and 540 parks, gardens, and open spaces which are open to the public as of right, or to which reasonable access is granted to the public, where that access is recognised by the Commissioners of Inland Revenue as contributing to the amenity of the locality. Where undeveloped land forms part of a settled estate, provision will be made to enable a limited owner who has not the full enjoyment of the land to charge the duty upon the corpus of the property. The valuation upon which the tax will be charged will be the value of land as a cleared site, deductions being allowed for any expenditure necessary to clear it, and likewise for any value attributable to works of a permanent character executed by, or on behalf of, any person interested in the land within a specified period of the date of valuation, for the purpose of fitting the land for building purposes. Until a valuation has been obtained it is impossible to estimate the yield of the tax with any precision, and the yield in the first year is made still more doubtful by the fact that, pending the completion of the valuation, the tax must be collected provisionally upon the basis of declarations by owners—arrears (if any) to be collected later when the valuation has been completed. But as these declarations will also form the basis for the charge of increment value duty until the valuation is completed, with respect to which an under-declaration may have serious consequences, it may be expected that they will be sufficiently reliable to allow at any rate, a large proportion of the whole amount due to be obtained within the year. I therefore feel justified in estimating that the duty of ½d. in the pound on undeveloped land and ungotten minerals will produce not less than £350,000 in the current financial year.