§ My third proposal under the head of land is a 10 per cent. reversion duty upon any benefit accruing to a lessor from the determination of a lease, the value of the benefit to be taken to be the amount (if any) by which the total value of the land at the time the lease falls in exceeds the value of the consideration for the grant of the lease, due regard being had, however, for the case of the reversioner whose interest is less than a freehold. The reversion at the end of a long building lease having no appreciable market value at the time the lease is granted is, when the lease falls in, of the nature of a windfall, and can be made to bear a reasonable tax without hardship. Some consideration 541 must, however, be shown to the purchaser of an approaching reversion where the purchase has taken place before the imposition of such a duty was contemplated. I therefore propose to have special provision to deal with that case. Special provision will also be made to meet the case of an increment value, in respect of which increment duty is payable under my first proposal, being included in a reversion. Another case in which special consideration should, I think, be shown is that of a lease determined by agreement between lessor and lessee before its expiration for the purpose of renewal. Towards the termination of a lease the lessee may be willing and even anxious to make improvements in the premises, provided that he can obtain a decent security of tenure at a reasonable rent. His business may be crippled for want of proper accommodation, but he is at the mercy of the ground landlord, who, in many cases, wrings out of him the uttermost farthing before agreeing to a renewal, which is to the interest of both parties. If the parties fail to come to terms the opportunity for an improvement, possibly of great public utility, is at any rate postponed, and perhaps irretrievably lost. The importance of facilitating such renewals to the interests of lessees, of the building trade, of the public generally, and even of the ground landlord himself, can scarcely be exaggerated. Accordingly in cases where a reversion is anticipated in circumstances of this character, and comes under taxation at an earlier date than would have happened in ordinary course, by reason of an agreement entered into with the lessee to enable him to improve the premises, I propose to make a special abatement of duty proportionate to the unexpired period of the original lease which is surrendered, and I have great hopes that this allowance, coupled with the fact that the value of the reversion for the purpose of the duty, will be calculated upon the difference between the consideration for the old and the consideration for the new lease, will induce owners to grant renewals more readily and upon more favourable terms than at present, and so tend to remove one of the most mischievous effects of the leasehold system.
§ There are no official statistics of the value of leasehold property, or of the dates upon which existing leases determine, and I am therefore not in a position to give more than a conjectural estimate of the annual yield of this duty. There is, besides, reason to believe that the num- 542 ber of leases falling in from year to year is by no means a constant quantity, and this makes the task of estimating for a particular year still more difficult. On the whole, I do not think that I can in the present year rely on a larger revenue than £100,000 from this source, and I propose, therefore, to estimate the yield of the three land taxes for the current year at £500,000, an amount which, however, must not, as I have already explained, be regarded as any indication of the revenue they will ultimately produce.
§ Mr. W. W. RUTHERFORDWhat is a lease? How long is a lease?
§ Mr. LLOYD-GEORGEIt is perfectly obvious that a tenancy from year to year would not be a lease.
§ Mr. RUTHERFORDBut what is?