§ (1) For the purposes of this part of this Act the increment value of any land shall be deemed to be the amount (if any) by which the site value of the land, on the occasion on which Increment Value Duty becomes due, exceeds the original site value of the land.
§ (2) The site value of the land on the occasion on which Increment Value Duty becomes due shall be taken to be:— 1026
- (a) Where the occasion is a transfer on sale of the fee simple of the land, the value of the consideration for the transfer; and
- (b) where the occasion is the grant of any lease of the land, or the transfer on sale of any interest in the land, the value of the fee simple of the land calculated on the basis of the value of the consideration for the grant of the lease or the transfer of the interest; and
- (c) where the occasion is the death of any person and the fee simple of the land is property passing on that death, the principal value of the land as ascertained for the purposes of Part I. of the Finance Act, 1894, and where any interest in the land is property passing on that death the value of the fee simple of the land calculated on the basis of the principal value of the interest as so ascertained; and
- (d) where the occasion is a periodical occasion on which the duty is due in respect of land held by a body corporate or unincorporate, the value of the fee simple of the land is ascertained for the purposes of the assessment of duty under this Act;
§ (3) Where, on any occasion on which Increment Value Duty is due in respect of any land, it becomes necessary, for the purpose of ascertaining the original site value of the land on which the duty is to be assessed, to apportion any original site value as first adopted for the purposes of this part of this Act, that value shall be apportioned between that part of the land 1027 on which duty is to be assessed and the remaining part of the land in such proportions as the Commissioners think just, and the value attributed on any such apportionment to each part of the land shall, for the purposes of this part of this Act, be treated as the original site value of that part of the land.
§ (4) Where the owner of any land proves to the satisfaction of the Commissioners that he, or any of his predecessors in title, has purchased the land within twenty years before the thirtieth day of April, nineteen hundred and nine, and that the amount then paid by him for the purchase of the land exceeds the total value of the land as first adopted for the purposes of this part of this Act, such sum shall be substituted for the purposes of Increment Value Duty for the original site value of the land as the Commissioners consider, having regard to the amount so paid for the purchase of the land, was at the time of the purchase the site value of the land.
§ Mr. JAMES MASON moved to insert after the words "subject to" ["subject to such deductions (if any) as the Commissioners allow"] the words "deduction of any costs and expenses of valuation or of sale or of transfer incurred by the owner in connection with the land."
§ The object of this Amendment is to deal with a class of deduction which is not contemplated or included in the section, and to include it in a slightly different way from the deductions which follow. The expenses which I propose to include do not in any way increase the actual value of the land, whereas the deductions referred to later in the clause relate to matters which are calculated to increase the intrinsic value of the property. Further, I desire to make my proposed deductions compulsory, and not to leave them to the discretion of the Commissioners. As the deductions to which I refer are legal expenses for transfer and valuation, to which the owners are deliberately put by the terms of the Bill, and which do not improve the value of the property, I think it is only reasonable that they should be compulsorily deducted from the increment before the duty is calculated. The Chancellor of the Exchequer is very fond of going to Germany for his lessons. But I am informed that in Germany they do make a deduction in these classes before calculating the Increment Duty. It is quite evident that if you do not allow for deductions of this kind a certain class of 1028 injustice must inevitably result, and this, I am sure, is not contemplated by the Government in their Bill. Here is a definite case, merely by way of illustration—and I am fully aware that my particular case is affected by the decision of the right hon. Gentleman as to the 10 per cent. A tradesman bought a house for £450. He made no structural alterations, and subsequently sold it for £475. The charges of the agents and solicitor came to about £20, including stamps, and as the Increment Duty under the Bill before the concession of yesterday would have been £5, making altogether £25, it would leave the man no profit whatever after paying Increment Duty. Cases of this kind, especially in the smaller transactions, are very likely to occur where practically the whole profit will be swallowed up in legal expenses and expenses of valuation. I think that these expenses, especially of valuation, are probably not at all realised by a great number of the hon. Gentlemen who sit opposite. I wonder whether they fully realise the huge cost of these valuations? I wonder whether they realise the bottomless morass of legal mud into which, in the way of expenditure, we are plunging; plunging, not at the expense of the State—that is fully guarded against—but at the expense of the individual.
§
It is a noticeable fact that hitherto there has been no attempt to form any sort of estimate in any quarter as to what the cost of all this undertaking is going to be. Only this morning in "The Times," I saw a letter from the hon. Gentleman the Member for Walworth (Mr. C. J. O'Donnell) which attempts some estimate. A few lines may be worth the attention of the Committee. The hon. Member says:—
There are many hundreds of thousands of landowners in Great Britain, each of whom must make a return for every separate holding. Their preparation (many millions of returns), involving as it will the necessity of obtaining valuations—since no prudent owner will rely on mere guesswork—must occasion enormous expense to owners, many of whom are men of small means.
He goes on then to form an estimate of the cost of the valuation which has to be paid by the owners. He says:—
I am assured that, including cost of travelling, etc., a valuer would charge 1 per cent. and most certainly ½ per cent. of the value. An 'elaborate' valuation is the State's demand.
He then refers to my right hon. Friend the Member for Wimbledon (Mr. Henry Chaplin), who, it appears, said on a previous occasion that the value of the agricultural land in Great Britain was £4,000,000,000.
§ Mr. CHAPLINNot agricultural land alone, but the whole land.
§ Mr. MASONHe continues:—
If only half that amount at ½ per cent. came under the valuation, the cost would be £10,000,000 sterling.Do hon. and right hon. Gentlemen opposite realise that they are involving the owners of this class of property in a valuation which is going to cost them £10,000,000? Why, it simply means that the legal profession and the valuers are to get thousands of pounds for every hundred that goes into the pockets of the State. Surely it cannot be contemplated that this heavy and uncertain burden of legal transfer and other expenses are to fall upon the private individual? The hon. Member in his letter calls it "Bee in the bonnet finance—if finance at all." Although that I scarcely Parliamentary and a peculiar expression to use, as an expression it is not far wide of the mark. I beg to move.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)I am rising to answer a totally different proposition to the one printed, and which I examined this morning. I will deal first of all with the question of the expenses of the transfer. The hon. Member gave us a specific case of a man buying a house for £450 and selling it for £475, and after expenses had been paid making a profit of £5. What happens? The house would be valued at £450 on the register. It is sold for £475, and the vendor is allowed the margin of 10 percent., and therefore the Act does not apply. It is absolutely free property, and that shows the advantage of the 10 per cent. margin. It clears all these small expenses and cost, and things of that kind ought to be dealt with as a whole. The hon. Member treated this as if the vendor paid this cost. I agree with him that in Germany there is an allowance for legal costs and some of the transfer taxes, but these transfer taxes are twice as heavy in Germany as here. They are more than twice as heavy—very nearly three times as heavy, and will be even after this Finance Bill is passed. In Germany there is a charge of £3 per cent.; here the charge would be only £1, even when the new Stamp Duties are imposed, and half of these fall upon the vendor in Germany. Take the case of a transfer here. I have some experience, notwithstanding what the hon. and gallant 1030 Gentleman the Member for Chelmsford (Mr. Pretyman) thinks, that I do not know much about land, of transfers, and I have perused many small leases in connection with land and minerals that might surprise the hon. and gallant Member. However, that is by the way. Take the transaction of the kind brought forward by the hon. Member for Windsor (Mr. Mason). The whole of the expenses of the transfer in that case are invariably paid by the purchaser. These gentlemen, the vendor and purchaser, go to the same solicitor, and he prepares the whole of the documents. It is not like a great transaction where an estate is sold—where the vendor is represented by one solicitor and the purchaser by another, and where they have to go into the investigation of title and of requisition. There, I agree, a good deal of expense falls upon the vendor, as well as upon the purchaser; but in these small transactions the legal expenses invariably fall upon the purchaser, and why should the vendor deduct the cost of legal expenses incurred by somebody else? There is no case at all for the deduction of these legal expenses. As to the question of valuation, why should valuation be deducted from increment? If any of these costs of valuation were deducted, the deduction ought to be made from the original site value; it is not an expense incurred after the original site value has been made, and therefore if there was any deduction for valuation it ought to be a deduction in connection with the original site value. Otherwise what would happen? I do not want to anticipate the discussion that will take place in connection with other expenses—the expenses of advertisements for instance, where the site value is practically created by the purchaser, where you have a place along the coast where probably no one would ever build a house except for the enormous sums of money spent in advertising the place. These things have to be considered in connection with the fixing of the site value, and I say the same thing applies here. It is not an expense which is incurred after the valuation is completed; it is incurred before the valuation, and it ought to be considered in connection with the original site value. Otherwise what would happen? If it is deducted after the original site value every subsequent purchaser would get the benefit of expenses which he never incurred. The expense is only incurred once by the original owner, he sells to somebody else; the second 1031 man then sells to a third. Why should they get the expenses of a valuation which they never incurred? That would be the effect of introducing this Amendment here. The hon. Member said this expense should be deducted or added to the original site value, when he states it ought to be added, I would remind him that applies to the halfpenny tax. I want him to make up his mind which horse he is going to ride. When the hon. Member talks of the vendor being allowed to deduct legal expenses, he wants to allow him to deduct something incurred by somebody else, and when he comes to the question of valuation, which he assumes is an expenditure that ought to be taken off, this certainly is not the stage at which to discuss it.
§ Mr. PRETYMANI admit there is a great deal of difficulty in estimating these deductions and in the consideration of the different valuations to be made, but I do not know whether the right hon. Gentleman quite appreciated the point of the Amendment. I am sorry it was changed at the last moment, but it is a very obvious point, and the right hon. Gentleman might have known that these deductions would be asked for. In Germany allowance is made to cover these expenses in the first instance; no expenses of valuation whatever are incurred in Germany, because there they have a State register, in which all the required particulars are always to be found. In addition to that, there is a further allowance of 15 per cent. The right hon. Gentleman makes a great deal about his 10 per cent. which he has been good enough to concede, but that 10 per cent. has to cover all out-goings, and it will not be sufficient to cover them with fairness. In Germany it has to cover nothing whatever. A man is entitled to have a small income. All the other allowances are made, and it is generally agreed that when the increment is as small as 15 per cent., the owner is entitled to it. Here the allowance is but 10 per cent., and that has to cover, first of all, decrement; secondly, interest—a most important item; and, thirdly, all other expenses, which may be very considerable. The Chancellor of the Exchequer says the vendor does not pay any expenses, but if the right hon. Gentleman looks at the Amendment again he will see that that answer is no answer at all. If there are none, then we do not ask for any. What defence is it to get up and tell us that the vendor does not pay? If he 1032 does not, we get nothing. My hon. Friend gave a concrete case in which £20 expenses had been incurred, and I am prepared to accept the Chancellor of the Exchequer's statement. I regret if I attributed inexperience to him in dealing with land, because I thought I was paying him a compliment. I did not think this Bill could have been brought in by anyone with any such experience. I have sufficient experience to know that when I sell a piece of land I invariably get a lawyer's bill, which I pay. I am speaking of small transactions, and invariably on every transaction the vendor pays so much and the purchaser pays so much.
§ Mr. LLOYD-GEORGENo.
§ Mr. PRETYMANThe right hon. Gentleman denies it, but it is so. The practice must have been altered since the days when the right hon. Gentleman practised, or perhaps in mountain regions the practice is different to what it is in London. There obviously are expenses, and all that this Amendment does is to provide that where there are expenses which fall upon the vendor they should be deducted. It is not reasonable that where the vendor has to incur expenses in selling he should have to pay a tax upon those expenses. You take a certain figure at which a man has bought a certain piece of land at which it has been valued to him. He sells it at another figure and incurs certain expenses which are a dead loss to him, and which have to be deducted from the difference between those two sums. You take those two sums and charge a tax upon the whole. I say you are taxing that man upon an expense which he cannot avoid, and you are taxing him upon an outgo. There must be some reason and justice even in such a Bill as this, and I cannot see how these things can be defended. The right hon. Gentleman says that the expenses of valuation should be on the original site value. The original site value is to be estimated as from 30th April, 1909, before there was any expenses of valuation incurred. Therefore they cannot be taken into consideration in that valuation. I do not see how that is possible. The right hon. Gentleman said they were not expenses incurred subsequent to the original site value, but clearly they are. The expenditure upon valuation will be an expenditure incurred by the owner subsequent to the date at which the original site value is to be fixed, and it must be so. Therefore they are expenses incurred subsequent to the valuation, and 1033 there ought to be a right to deduct them in arriving at the tax on the site value. The point made by the Chancellor of the Exchequer as to what would happen on the second, third, and fourth sales brings us back again to the difficulty pointed out yesterday, that if he is going in every case in the future to the Day of Judgment to throw back the original valuation, he naturally gets into all these difficulties. That necessarily follows; but if he started at the second point and made that a point of departure, an allowance made there would stand for ever. That would work smoothly; but you will get into all these difficulties if you try to throw back to the original site value in every subsequent case, however many transactions may have been incurred, however much the land has been subdivided, and however many units have to be examined. This Amendment simply allows the deduction of costs and expenses naturally incurred by the owner, which he will have to show were actually incurved. I flunk that is a most reasonable request, and if the Chancellor of the Exchequer has a little more time to consider the point, he will see that it cannot in any fairness be resisted, and it ought not to be included in the allowance of 10 per cent. which has already been given for a totally different purpose. That 10 per cent. does not more than cover that particular purpose, and cannot be held to cover this reasonable request.
§ Mr. W. W. ASHLEYI appeal to hon. Members opposite to give all the support they can to this very reasonable Amendment, because those who are interested in land, whether they own a large or a small amount, think it is a little unfair that not only are they having this tax put upon them, but they are also having a further heavy tax placed upon them for legal expenditure in connection with valuation and other things. I will give the Committee an instance which came under my notice in regard to a small property in the home counties. This property, comprising 170 acres, was bought two years ago for £17,000. A portion of that land, comprising some 12 acres, was bought 12 years ago for £2,200. Previous to the whole 120 acres being bought by the one man two years ago the portion of 12 acres which was bought for £2,200 was put up for sale separately, and was withdrawn at £1,500 because no one would bid any more for it, and that was the reserve price. Here we have an instance of land within a distance of 11 miles of the Marble 1034 Arch which, in 18 years, has decreased from £2,200 to £1,500. I am not now discussing the question of decrement, but I wish to point out that if you are going to put upon the owner of those 170 acres the immense difficulty of ascertaining the site value of those 12 acres of land which, 20 years ago, were bought for £2,200, and which two years ago were withdrawn at £1,500, and this land was included in the 170 acres, if you are going to put this burden upon that land you will be putting an unreasonable burden upon the owner. How can anybody value those 12 acres? It is obvious that the owner of the land who is not skilled in land valuation will not attempt to value them, and he will be driven to engage a professional man. We all know that the great majority of land-owners in this country, if this Bill goes through in its present form, will be seeking expert advice from the great firms of land agents all over the country. Obviously, there is only a limited number of these firms and of people who are skilled in valuing land. What will be the result if the demand exceeds the supply? Naturally, the price of these gentlemen who are skilled in this matter will go up. Their charges are already high, and they will go up higher. The lawyers say they are already over-worked, and that they cannot work at the ridiculously low prices of the past. Their charges, therefore, will also go up. We shall not only have this extra tax put upon the land, but the land agents and the lawyers will charge much higher fees than they do at present. I would also point out to the Committee that a year ago these 12 acres, which two years ago were withdrawn at £1,500, were valued by an experienced land agent, and he charged £25. At that rate, we should not have half per cent. charged on the capital value but one per cent., and therefore, instead of 10 millions, at which the hon. Member for Walworth put the legal expenses, we should have 20 millions. I think, whether it is 10 or 20 millions, these charges ought to be met in some way, because, if you are going to put this heavy tax upon the owners of land, you ought not to impose upon them also these heavy legal expenses.
§ Mr. GEORGE YOUNGERI rise because an ounce of experience is worth a ton of theory in this matter, and I may tell hon. Gentlemen that when the Scotch Valuation Bill was under discussion—where the values to be made were very much the same as they will be under this Bill—I had a farm, consisting of about 140 1035 or 150 acres, valued for the purposes of the Debate, and it took an experienced and practical man very nearly a fortnight to do it. The right hon. Gentleman will really find it is not only an expensive but a difficult thing to do, and of course everything depends upon the construction he places upon the word "structure." I do not know whether it includes main drains, roads, hedges, and everything of that kind. If it does, it would be a very costly thing indeed. It is really mean to put all these charges on the owner, and a deduction ought to be made in respect of them. My hon. Friends have made out a very good case, and I give that experience of my own as what will happen, assuming the Bill is not amended, as I hope it will be.
§ Mr. JAMES HOPEIt cannot be true to say, as the right hon. Gentleman the Chancellor of Exchequer has said, that it is only in valuing the original site value that the owner will be put to much expense. There are a great number of cases which may arise for determining the site value for the purpose of the Increment Duty, and there may be a great deal of trouble in getting the apportionment of the original site value, which will involve very nice questions, and in which a great deal of professional advice will have to be taken. For example, where the occasion is the death of any person, and the particular plot on which the Increment Value Duty is to be charged has to be valued, much expense will fall upon the owner. Again he may have to test the value of the fee simple on the passing of various interests. There are therefore numerous points in which he will be put to extra expense when the site value is determined quite apart from the original site value. One or two calculations as to what the expenses of valuation will be quite apart from the legal charges have been made, and the leter of the hon. Member for Walworth has been quoted. A Member of a leading firm of surveyors has supplied me with another calculation. He takes the rateable value of. England and Wales as in 1906, £207,000,000. He adds a little for increment since that date, say, four per cent., and he takes off the value of the property owned by the rating authorities, leaving a round average of £200,000,000. He says the capital value will be at least 25 times the rateable value, and he arrives at a capital value of the real property in England and Wales of £5,000,000,000. Now comes the calculation as to how the 1036 ordinary scale of surveyor's fees is to be applied to the valuation of a great property like that. Of course a great deal will depend upon what the average is in any particular owner. He takes a high average, an average as large as £5,000, as the value of each owner's property in any one locality. Five thousand pounds will be the average unit with which the surveyors will have to deal. It is probably much too high. He applies what is known to surveyors as Hyde's scale to this—I believe it is ¾ per cent.—and it works out at a total cost of £38,000,000 for valuation for England and Wales. He says that if you allow deduction for surveyors accepting fees less than the Ryde scale, still you would come to something exceeding 20 millions. We do not ask that the whole of that should be deducted. All we ask is that the expenses in ascertaining the site value shall be deducted before you proceed to tax the owner.
§ Mr. HENRY CHAPLINWe have this afternoon to make, as we have often had to make before, complaint of the very meagre answers given by the Government to the objections raised over and over again by hon. Gentlemen on this side of the House. The right hon. Gentleman the Chancellor of the Exchequer, in replying to the Mover of the Amendment, complained that it had been transformed, and that instead of it being moved as it appeared on the Paper, it had been divided under two heads. That is not true. My hon. Friend thought it better no doubt to specify exactly the point he wished to put before the Committee, and to which he hoped to obtain an answer from the Government. The right hon. Gentleman said he would deal with transfer, and he proceeded to do so. He began by saying the cost of transfer could hardly be deducted from the cost of valuing the site value. As far as I am able to follow the Bill and the Amendment, that is the position at this moment. Clause 2 deals entirely with site value, and sub-section 2 says that the site value of the land on the occasion on which the Increment Value Duty becomes due shall be taken to be on a certain occasion which it specified so and so. On each of those occasions in the subsection, the omission of one of which was ruled out of order yesterday, it specifies how the value is to be calculated. Then we come to the Amendment at the end of those sub-sections, and it reads: "Such value shall be taken to be subject to certain deductions." Here is one of the de- 1037 ductions which my hon. Friend (Mr. James Mason) desires to move, but upon that point the Chancellor of the Exchequer had very little to say. What he did tell us was—and I am exceedingly glad to hear it—that he had had six years' experience in a land agent's office. It is more surprising to me that, having had that experience, he should have so little to tell us on the subject of valuation and the cost of the valuation he is imposing by this Bill on the owners of land all throughout the country. My hon. Friend behind me quoted a letter which appears today in "The Times," written by a supporter of the Government, in which some estimate is made of the burden that the right hon. Gentleman is deliberately casting upon the owners of real property in all parts of the country. I am not prepared myself to say at this moment how far the different estimates which have been made on this subject are right or how far they are wrong. There is no doubt about one thing. The expense will be enormous. The estimate of the hon. Gentleman which appears to-day in "The Times" is 10 millions of money. Another estimate given from the back benches by my hon. Friend (Mr. James Hope) is a great deal more than that. I put down a question asking the right hon. Gentleman whether this question had been considered, and whether any organised estimate had been attempted to be made by His Majesty's Government before they imposed this enormous and unwarrantable burden upon the owners of land. What is the history of that question? On three different occasions when it was asked the Chancellor of the Exchequer was not in his place to answer it. I make full allowance for the very unusual and exceptional labours which are thrown upon him at present by the necessity of considering all the numerous Amendments which appear from day to day upon the Paper. At last I caught him as he was coming in, and, having obtained the leave of Mr. Speaker after the questions were all over, I put the question to him. What was his answer? It differed somewhat from the answer given on the first occasion by the Secretary to the Treasury (Mr. Hobhouse), who said it had been considered, but he could not give the estimate. I gathered from the answer of the right hon. Gentleman the Chancellor of the Exchequer that it had never been considered at all, because his reply to me was, "Why, obviously it is quite impossible for me to estimate what 1038 it is going to cost the owners of the land in the country, although I have placed that burden upon them." A more extraordinary statement, coming from a Minister imposing a burden of this kind upon people all over the country, I do not think I have ever heard in my life. What consideration has this subject received from His Majesty's Government? I really think we ought to be taken into their confidence, and we ought to be told whether they do really expect the owners of real property in this country to pay the cost of this burden, whether it be 5, 10, 20, or 30 millions. We ought to be told frankly whether it is to be considered additional taxation, and, if it is, then I say there ought at least to have been some estimate on the part of the Government as to this enormous charge they are imposing. I hope that even yet we may hear something more from the Government on this subject of the cost of the valuation which they are imposing upon people right throughout the country. I desire to get some further information on the subject.
The EARL of RONALDSHAYThe first part of this Amendment deals with only one of the many Bills which are confined within the cover of this Budget. It is interesting to note that the Government themselves are admitting that the Budget covers many Bills. The Vice-President for the Board of Agriculture (Ireland) (Mr. T. W. Russell), speaking at Belfast the other day, remarked that the Government would carry the Budget, with all the Bills inside the Budget, and he went on to point out that among the Bills included was a Valuation Bill. Everybody admits that enormous expense will be thrown upon the owners of land who are called upon to make this valuation. It is admitted by Members on both sides of the House, and I have a quotation here from the hon. Member for South Buckinghamshire (Mr. Arnold Herbert), in which he declared in this House that the mere question of valuation is going to be a very heavy burden on owners of land. I could give many quotations from speeches and from statements issued by various societies, as well as from Commissions appointed by the Government, but I think it is only necessary to add one. Various estimates have been made as to what this valuation will cost. I believe it was estimated that in the case of the City of Glasgow the cost would be something like half a million sterling, but we also have something approaching an estimate from a Government source, given by 1039 Mr. J. Grant Lawson, Secretary to the Local Government Board under the last Government, when dealing with another Bill affecting valuation. Mr. Grant Lawson stated, on 14th April, 1905:—
This valuation and the separation of site from structure will cost a great deal of money. The cheapest estimate for London was £400,000. The estimates of other surveyors varied between two millions and four millions, and the net result to the whole country was that a valuation separating site from structure would cost at least 18 millions sterling.I notice that the Prime Minister the other day, in one of his many interesting speeches on the Budget outside this House, boasted that it was a very fair Budget, and gave as his reason for making that boast that—I am imposing in indirect taxation £6,000,000, and I am imposing in direct taxation £6,800,000, and that is an eminently fair distribution of the burden.But he did not tell his audience he was further imposing on the payers of direct taxation a sum of 18 or 20 million sterling, which would be required for the valuation. Under these circumstances, I hope the Government will find it possible to give favourable consideration to the Amendment of my hon. Friend, which, though it does not remedy the whole of the grievance the owners of real property legitimately feel, will, at any rate, do something to mitigate the injustice.
§ Mr. TUDOR WALTERSMay I remark, as a humble Member of the profession of surveyors and valuers to which the hon. Member for Sheffield (Mr. Hope) has just referred, that the basis of calculation which he has adopted for the cost of valuation, namely, Ryde's scale, is, after all, only one of those ideals which it is desired to attain, but which is seldom arrived at.
§ Mr. JAMES HOPEIt is not my calculation. It is a calculation sent me by a member of the Surveyors' Institute, and the sum of 19 millions, at which he arrives, is on the basis of half Ryde's scale.
§ Mr. TUDOR WALTERSI am very glad to find my brother surveyors are making such liberal preparations for the emoluments of the profession. I have never been guilty of cutting down prices, and I do not intend to begin doing so, but it does seem to me that, when figures of this kind are submitted to the House, it is necessary to examine them quietly. The first suggestion is that Ryde's scale is the proper scale for valuing under this Act, but if hon. Gentlemen will make themselves acquainted with the fees that are 1040 paid to eminent surveyors for valuations in some of our urban districts they will certainly find that that scale is not general. As far as the great estates in this country are concerned, it will not be necessary in most cases to go outside and employ a surveyor either on Ryde's scale or on any other scale. I do not know a wellmanaged estate office which has not in its own possession plans, schedules, and valuations of the property of the owner, and which has not on the staff a practical man quite competent to make such a valuation as will be required under the provisions of this Act. Then, again, to arrive at the many millions with which my colleague has dazzled the House it will be necessary to include the cost of valuing the house property. But may I point out that an expert surveyor would not necessarily value every house separately on the property? After all, this house property is usually built in streets, and, having valued one house, it would only be necessary to multiply the total result by the number of houses included in the property. I venture to submit, therefore, that these calculations as to the cost of valuation are most grotesquely exaggerated. Still. I have a little sympathy with some of the difficulties which will face owners of land in valuing certain classes of property. I look upon this self-valuation principle as only a temporary expedient. I am afraid if a scale of surveyors' fees is allowed under this Act for the purpose of arriving at the Increment Tax you will stereotype that self valuation and that scale of fees for all time. I do not want to see that done. I want to see a really effective system of State valuation, because I think that would produce a much better return for the Treasury. May I point out one case in which difficulty is likely to arise? We will take two ten-acre fields of undeveloped building land adjacent to a town, and for all practical purposes having the same value. One field is part of a large estate. The other is owned by a man who has recently bought it, and cannot afford to keep it idle. Both those owners have to go through the same process of self-valuation. But they will look at the matter from an entirely different standpoint. One owner will say to himself, "I will not develop that field for many years to come. It gives access to the remainder of my estate, and I will not develop it until the whole estate is ready for development." He is concerned not so much about the increment as about the Land Tax, and, therefore, he puts the 1041 valuation as low as possible. But the owner of the adjoining field, who has to develop almost immediately, does not bother about the Land Tax. He is concerned with the Increment Tax, and he, therefore, puts the valuation as high as possible.
The CHAIRMANI have allowed the hon. Member to develop his argument, but it seems to me he is now discussing a point which properly comes in on Clause 16. This is an Amendment to allow the deduction from the increment value of the expense of the valuation on sale or transfer of the land. The whole question of valuation hardly arises here. It is germane, I think, to point out that the cost of valuation will be very heavy, and I have allowed that argument to be advanced, but I do not think it is in order on this Amendment to go into the whole question of the cost of the valuation.
§ Mr. TUDOR WALTERSI will not pursue that further. I was only attempting to make this point, that, instead of allowing the surveyor's scale for valuation in connection with this particular case you should aim, in the near future, at getting a proper valuation made by the State. The object of my illustration was this: these two men would value from very different standpoints, and they would arrive at two very different values—one would be four times as much as the other. Although this self valuation may be a necessary and temporary expedient, I do not want it stereotyped, because it is not satisfactory. I hope that, as soon as possible, the right hon. Gentleman, by cooperation with rating and other authorities and by the appointment of proper valuers, will be able to arrive at some satisfactory basis upon which this Increment Tax can be calculated. I do not look upon the present proposal as a permanent arrangement, and I hope that it will not be long before we get a more effective system of valuation.
Mr. BALFOURWe all listened with interest to the hon. Member who has just addressed the House, knowing that he is closely in touch with the difficult problem of valuation. But I do not think he perfectly realised the character of the suggestion he has just made to the House. He says that the system proposed in the Bill is unsatisfactory on the ground that it involves hardship, and he urges that it should be treated as a temporary expedient, provided the Government hold out hopes of having a State valuation. I am not sure that this topic is in order, but 1042 may I just make one observation? The hon. Member is actually advising the Government to persist in a measure which is going to throw a prodigious burden on a particular class, that prodigious burden being only temporary, and not constituting a permanent or satisfactory settlement. I think if he will reflect upon that proposition he will see that he is greatly aggravating the grievance we complain of. If he suggests that this enormous burden is not to have any permanent effect, is to be a mere stop-gap, until the Government step in to do what it is probable they ought to do now, and that is to carry out their own valuation at their own cost, it will add to the grievance. I confess I was a little disappointed with the speech in regard to the cost of valuation of the hon. Gentleman who has just spoken (Mr. Tudor Walters). He is a great expert in this matter, but he only took up a position of purely destructive criticism and supplied us with no constructive calculation, or information, as to how we should arrive at the cost. He derided the idea that it would cost this sum, or that sum, or that the Ryde scale should be adopted in its entirety, which was never suggested on this side of the House. All that has been suggested on this side is that, according to the calculations of some expert's, half that scale should be adopted, but with regard to that I am not in a position to form the smallest judgment as to whether any of the estimates which have been put forward has the smallest basis in fact. There has been an estimate given of 10 millions by the right hon. Gentleman opposite; there has been an estimate of 18 to 20 millions by an official of the Local Government Board in 1905, and there have been later estimates, bringing up his estimate of 20 millions to 30 millions. I have not the least idea which of these estimates is accurate, or whether any of them are accurate; whether the basis of the charges in them is excessive, or is not excessive, or whether the lowest and the smallest of them does not fall short of the actual needs of the case. Have we not, however, a right to ask the Government for some assistance in this matter? It is all very well for the Government to get up and say, "your valuations are extravagant and fallacious," but surely if all these people, whom we are obliged to rely upon, in default of official information—if all these estimates are incorrect, the Government ought to have given us some estimates beforehand. I cannot make out that they have even taken the trouble to estimate 1043 the number who will come under their Bill, which I should have thought was the first thing that would have been done. But they have not made the smallest attempt, so far as I know, to tell us what kind of burden will actually be thrown upon the owners of property in land and houses in our big towns and our agricultural districts, and they take up, like the hon. Gentleman, a purely critical attitude, without giving the smallest assistance, upon a point which everybody must admit is very important, from the point of view of the actual working of the Bill.
This Debate has been conducted by all the speakers to-day from the point of view of the heavy burden you are going to throw upon the owners of property in land and houses. They approached it simply from the point of view of the magnitude of the grievance, and if the Government and the right hon. Gentleman do not think it is a great grievance, they should supply an estimate which would correct these extravagant figures, which they say have been given by my right hon. Friend, and should prove that those figures are extravagant and fallacious. I do not wish, however, to approach this matter from the point of view of the grievance to a particular class in the community, namely, the owners of houses and lands, the owners of property solely, but I want to approach it from the point of view of the principles upon which you ought to carry out taxation of this kind. Consider what you are doing! You are determined to get the increment on a particular class of property, and surely you ought to see that the increment is the net, and not the gross, increment. We had a Debate yesterday, to which I mean to do no more than to refer, in which the case was stated of a man who ran his property as a part of his business. On some of the houses he was dealing with he made an increment profit, on others he made no profit at all, or made a loss, and it was then pointed out that if you treat that man as you treat any other member of the community he ought to be permitted to set off his losses against his gains. That was refused; I cannot see on what grounds, but the Government were supported by the hon. Member for Leicester (Mr. Ramsay Macdonald) on the ground that it should not be treated as an Increment Tax at all. Very well, then, let us abandon for a moment the view that anybody dealing with land or houses may set off losses against gains, and pay on the difference between the two. I still think 1044 that is fair; but surely you are going much further. You are going to say to a man, "You own land or property, which, owing not to any exertion of yours, but to the exertions of the community, has become valuable, and we mean to take off 20 per cent. of that increment value." Let us grant, as we are bound to grant, for the purpose of considering this proposal, that that is a just plan. It is a question we shall have to discuss at a later stage, and I am not going to argue it now, but at the present I assume it is just, but if you impose it, see that it is 20 per cent. of what the man makes by the work of society; if it is the work of society, see that it is 20 per cent. of that work on which you are going to take toll, and before he gets it into his pocket, see that it is on what he gets into his pocket. Is not that part of the business, but that is not the proposition of the hon. Member for Leicester. It is quite a different proposition, and I maintain that it is an unanswerable proposition. The Government say, "Oh, you are raising on this Amendment the general question of the original valuation." No, Sir; we are not raising on this Amendment the question of the original valuation, and everybody must see who reads this Bill that whenever the payment of this increment value is made there will be transactions connected either with the transfer of the property or with the estimate of the freehold value of the property inferred from some interest in the property, complicated calculations, the very complexity of which embarrass unhappy Ministers when they try to explain them to the Committee, and which, when translated into the concrete transactions of every day life, will cost money to the man who makes the transfer. The hon. Gentleman who has just spoken will, I am sure, not deny that, although he may differ from the estimates of the amount of the cost; and if that is so, you are taxing a man not really upon the increment which he gets, but upon something much more than increment. That must really be the case, and on your own process that must be unjust.
At all events, the Government have got to defend this, have got to say something more than the Chancellor of the Exchequer has so far condescended to tell us; they have got to explain how it is just and fair, when you are taking 20 per cent. of the increment a man gets from his property, you are taking that 20 per cent. not on what he gets, but on what he gets plus an expenditure on lawyers and surveyors 1045 and assistants, whom no one doubts he must call in to assist him whenever this tax becomes due. That is the case, irrespective of the magnitude of the sums concerned. As to the magnitude of the sums concerned, we have a real grievance against the Government, that they give us no assistance or estimate. We shall refer to that later, but at this moment I do not wish to press upon them the magnitude of the burden. I wish to press upon them simply the plain equity of the request, that when you tax a man upon increment it should be really on the increment he gets, and not upon an imaginary increment, and not at a cost which in the view of every man in this House will be thrown upon the owners of this kind of property. I hope the Government will feel that this is not a point which they can really ignore, and that in order to make their Bill just, on their own principles of justice—on that peculiar code of justice which they are now proposing—even in accordance with that, some substantial concession must be made to the principles advocated by my right hon. Friend.
§ The CHANCELLOR of the EXCHEQUER (Mr. Lloyd-George)The right hon. Gentleman has chosen to assume that no answer at all has been given by the Government to the Amendment of the hon. Member for Windsor (Mr. J. F. Mason), but I made two answers to it, to not one of which the right hon. Gentleman—I will not use the word "condescended," which he was good enough to apply to me—but not one of which, at any rate, he even claimed to have considered. At any rate, I can claim that either those arguments are really not worth any notice on the part of the right hon. Gentleman or perhaps have been forgotten, but the two answers I gave have never been referred to. It is perfectly true that he went on to answer other arguments advanced by the hon. Member, and he said, "You ought to charge these owners, these unfortunate owners, upon the real increment." That is what you are going to do. It is perfectly true that we make all allowances in respect of anything which has contributed to the value of the land—at any rate, that is our intention. I think we have done it. If we have not done it it can be strengthened, but anything which is done in order to create the increment which we propose to tax shall be fully recognised with regard to it, but we object in the first place to deduct legal expenditure, which in these small cases is never paid by 1046 the owner himself but by somebody else; and, in the second place, we object altogether to a deduction in respect to a payment which is only made once for all on fixing the original site value, and which, if it is to be charged at all, ought to go on the fixture of the original site value. The right hon. Gentleman never referred to that argument at all, and never answered it. Let me come to the question of the expense. The right hon. Gentleman complained that we did not give an estimate, but I ask him how is it possible to frame an estimate under these circumstances? He might have used exactly the same argument with regard to the Death Duties. He might have said, "Here you have the value of the land, the value of the buildings on the land, the value of the minerals under the land, all to be valued for the Death Duties. It will involve an enormous expenditure every time, an owner dies, and surveyors must be employed and paid under Hyde's scale." Let me point out, in regard to this expenditure, that every time anybody dies it is capable of being argued in exactly the same way, and the valuation there is quite as important, because 15 or 20 per cent. on the whole has to be paid, while here you are only calling upon a man to pay 20 per cent. on a mere margin, or the halfpenny tax on the part of the property which is undeveloped. The cost of the valuation, therefore, is as important, and more important, in the case of the Death Duty. I agree with my hon. Friend (Mr. Tudor Walters), in his able and interesting contribution to the Debate, that what really happens is, that in all these great estate offices there is a man much more capable of valuing the whole of the estates than anybody from outside, and that is what happens in most of these cases. They are men with great experience. Men who know all the facts. They prepare the valuation and submit it, and put it through. That is exactly what will happen in this case.
What will happen if there is an allowance made under Ryde's scale? There is no deduction made in the case of Death Duties for valuation, and although hon. Gentlemen opposite have been in office for 10 years after the Finance Act was passed, they have never attempted to introduce this principle into the Finance Act of deduction in respect to the cost of valuation, and it is just as necessary and fair and equitable in the case of the Death Duties as it would be in the case of valuation for this purpose. If the money has to be 1047 paid to carry out the obligation of an Act of Parliament, why should there not be a deduction? As a matter of fact, those who do the work now do it as part of their daily work as agents in an office, and they are not paid for it; and if a percentage was to be deducted the whole thing would be whittled away by imaginary expenses which would never be incurred. We took all this into account when we fixed the amount at 20 per cent., and there is no case at this stage for considering the deduction of an amount which may or may not affect the original site value.
§ Mr. BONAR LAWThe right hon. Gentleman has stated that the tax which he proposes is very much smaller than the tax imposed in Germany. We shall judge of that better when he has carried out his promise and given us full particulars of what that tax is. In the meantime I will point out that while the percentage, which is taken here is in every case 20 per cent., in Germany it does not arrive at 20 per cent. till the profit has by a great deal exceeded 100 per cent. altogether. Then the right hon. Gentleman says it is on a different principle, and that the profit in Germany is on the total value of the property. I have tried twice on different occasions to prove that that is precisely what is going to be done by the Bill. You are going, in the name of increment profit, to take in reality the whole profit which, in future, is made on the real estate. I tried twice in the small hours of the morning to get an answer from the Government as to whether or not I was right in making that statement; and the only answer I got was in the one case to refer me to a later clause, and in the other to move the closure. I am convinced that I can satisfy the right hon. Gentleman that that difference does not exist between the system in Germany and the system here, but that in both cases the total net profit will be taxed.
To come to the point which the right hon. Gentleman rose to answer, he first of all gives as his reason why you should not take the tax on the net increment, that he makes allowance for anything that the man has done to improve the property. What in the world has that to do with it? The net increment does not arise—no increment arises until all that has been taken into consideration, and, therefore, that argument falls absolutely to the ground. Then he says it is precisely the same as the Death Duties. No one knows better than he does that there 1048 is no comparison as to the difficulty of these two valuations. I believe it is his intention, out of that magnanimous feeling to land-owners which he expressed so fluently in the first Budget speech, to impose this additional burden upon them, but at present the valuation cannot exceed a certain amount of the net annual rent. That at once limits it, and makes the calculation enormously easier than it, is at present.
The next point I wish to make is to refer to the speech of the hon. Member for Sheffield (Mr. Tudor Walters), which the right hon. Gentleman told us was a most valuable contribution to our discussion. It is evident in how great straits the Government must be when you consider that that speech was any contribution, valuable or without value, to our discussion. He told us, in the first place, that the valuation will present no difficulty to the big estates, because they have people who are capable of dealing with them. Does he not see that that means, at all events, that they are going to impose an immense burden on the class which they profess not to touch—the owners of small estates? Then the hon. Gentleman made another extraordinary statement. He said when you come to value house property, all you have to do is to take one house in a street and value the rest of the street on the basis of the one house. Was ever such a proposal put forward by a sane person? If all you wanted was to have some statistical information to satisfy curiosity, such a valuation might do; but this valuation is one which is going to cost money, and ordinary self-preservation will make it absolutely essential for the owner to get the best advice, so as to see that he is not unfairly treated by the Government. If anyone were asked to lend money on a house, he would have a most elaborate valuation, in order to see that he did not lose his mortgage, and the same principle of self-interest must apply here—you must have a careful and accurate valuation in order to see that when you sell property you do not pay the Government far more than you ought to. It must be thoroughly and carefully made, and it will therefore cost a great deal of money.
The right hon. Gentleman really has not dealt at all with the point put forward by my right hon. Friend. You profess to tax increment value. On what principle of fairness, or of justice, even taking your own Bill, can you tax a man for an increment value which he does not get? It is 1049 perfectly obvious that he does not get the increment value if from the amount of assumed profit you have to deduct the expenses to which he is put by the Bill. That is the point, and there is no answer to it. Surely anyone with any sense of fairness must see that if you are going to tax increment value, and in getting that tax are going to put an enormous burden in the way of valuation upon the owner, the very least you can do is to deduct the expense to which he is put before he pays the tax. That is made much stronger for the reason that the valuation must entail a great expense. It is easy enough for hon. Gentlemen to say that we exaggerate the amount of the expense, but in one of these discussions in the small hours the Attorney-General, who perhaps was not so wide awake as he generally is, made this admission, that the valuation will be elaborate, costly, and extensive. Can you have a valuation which is elaborate, costly, and extensive, and which is not going to cost a great deal of money? This burden is going to be thrown upon the people who pay the tax, and the Government refuse to give us any estimate of what that cost will be. Yet everyone must see that the cost is an addition to the tax, and I say there is no principle, either of fairness or justice, which can make it right for the Government to refuse the Amendment.
§ Mr. F. W. LAMBTONThe Chancellor of the Exchequer has compared the cost of valuation under the Bill with the cost of valuation for Death Duties. Like many of his other comparisons, it is more ingenious than ingenuous. The right hon. Gentleman told us that the valuation, though it might be costly, though not so costly as we made out, would only be paid once on the original site value. He seems to have forgotten his own Bill. There is a quinquennial valuation of undeveloped land, so that the cost of valuation will fall upon the owners every five years.
The CHAIRMANI do not see what that has to do with the Amendment. The Amendment is the deduction of the cost of valuation for increment value, and undeveloped land valuation has nothing whatever to do with it.
§ Mr. LAMBTONI think if the valuation is taken quinquennially the cost must be increased. The hon. Member for Sheffield (Mr. Walters) alluded to two fields, one undeveloped, which might have a value put upon it, and if that argument is used I have a right to use the same 1050 argument that undeveloped land will come under the quinquennial valuation and will be valued for the purpose of increment. What is the object of quinquennial valuation if nothing is to be based upon it? The right hon. Gentleman is slurring over the point when he says the cost of valuation will only come about once, and only on the site value.
The CHAIRMANThat does not come in connection with the Amendment, and the hon. Member has no right to argue it in regard to the Amendment. The Amendment deals with increment value only.
§ Mr. LAMBTONI was alluding to a remark made by the hon. Member for Sheffield.
The CHAIRMANI warned the hon. Member for Sheffield (Mr. Tudor Walters) that he was getting beyond the bounds of order.
§ Mr. LAMBTONThe hon. Member for Sheffield, referring to the cost of valuation put upon land-owners, said they had persons employed in their estate offices who would perform the valuation for them. Am I not entitled to reply to that remark?
The CHAIRMANIf the hon. Member will go on with his speech I will tell him whether I consider he is out of order.
§ Mr. PRETYMANOn the point of order. The Amendment asks that a remission of Increment Value Duty should be made in respect of all valuations of whatever character in regard to land, whether under this clause or any other, and I submit that that is in order. The suggestion is that this should be deducted. That is the point of the Amendment. Whether the valuation is for increment value or not does not affect the matter.
§ Mr. LAMBTONWhat the hon. Member for Sheffield (Mr. Walters) said as to the cost of surveying may be quite true. I have no doubt that large land-owners will employ surveyors to make the valuation, but what about the poor land-owners? What about the ordinary squires throughout the country? It is all very well for the hon. Member for Sheffield to talk about the surveyor's work being a cheap matter, but it is not at all a cheap matter to a poor man who has a small estate. If every small land-owner has to employ surveyors and solicitors, it will involve very con- 1051 siderable cost. It is all very well for hon. Members to sneer, but I say that the cost will be enormous, and I hope that the Chancellor of the Exchequer may see that this is a matter which ought to be considered.
Mr. J. ELLIS GRIFFITHI am not concerned with the question whether this work of valuation will be done by surveyors or by land-owners, and I will not enter into it. The Amendment, as I understand it, covers all costs and expenses connected with the valuation of the land. I think it would be impossible to justify an Amendment so widely drawn as that. The question I want to put to the Government is this: Supposing a man is selling his land, and he employs an auctioneer to sell it by auction. He has the land surveyed. Is he, or is he not, to be allowed to deduct the cost of that from the consideration in the transfer? That seems to me to be a case which ought to be covered by the Bill. The second case which I would instance is this: Supposing a land-owner employs a land agent to get a purchaser for his land, is the landlord entitled to deduct the commission which he pays to the agent in connection with the transaction? I wish to ask whether either or both of these cases are included in the deductions allowed by the Bill? If they are not, I am sure the Government will see their way to put them in.
§ Lord WILLOUGHBY de ERESBYI am inclined to agree with the hon. Gentleman opposite that in the case of large estates in this country there ought to be found some man permanently employed who will be in a position to give fairly and accurately the different valuations required by the Bill. I do not, therefore, anticipate that on the large and rich landowners of this country there will be a heavy burden as regards the cost of valuation, but to some of the smaller and poorer land-owners the cost will be appreciable. Only the other day I tried to find out how many land-owners there were in my own Constituency, which is almost entirely an agricultural Constituency. I found that there were 2,800 ownership voters. I was pleased at this, because I felt that they would vote solidly for me at the next election. Hundreds of these men own only small portions of land, and if each has to send in the different valuations which are required by this Bill it will cause a considerable tax upon them, 1052 and a great deal of irritation among them. There can be no doubt that they will be put to large expense, which they will be unable to deduct should a windfall come their way, and should they be able to make a little money out of what may have seemed to them an unprofitable investment. As regards this Amendment, I think the Government ought to make some concession, for the cost of the valuation will be an imposition which will fall very hard indeed on a large number of the smallest and poorest land-owners. I was surprised to hear the Chancellor of the Exchequer refer to the speech of the hon. Member for Sheffield (Mr. Walters) in the terms which he used, because I listened carefully to that speech, and it appeared to me that he took the part of Baalam, inasmuch as he ended by cursing the proposal in the Bill as soundly as he could. The hon. Member said he did not like this method of valuation and the cost falling upon the individual. He considered it would be much better if the Government would prepare their own valuation and pay people to do it. He did not look upon this as more than a temporary measure. The Chancellor of the Exchequer said when you have got the valuation done by this process there would be no other valuation. The whole moral that could be drawn from the remarks of the hon. Member for Sheffield was that he thoroughly disapproved of this method of valuation.
The original site value is the most important valuation that will ever occur in the whole history of this tax. The Chancellor of the Exchequer referred to the question of the Death Duties. I do not profess to be an expert upon that question. I object very strongly to the Death Duties, because a large proportion of what the heir has to pay does not go to the Treasury, but to lawyers, valuers, and other hangers-on of that description. [Laughter.] I apologise to the legal gentlemen for using that expression. I admit that they are very valuable interpreters of the law, and, perhaps, I may be allowed to withdraw the expression "hangers-on." There was nothing offensive meant by that. I should rather say that they are valuable aids in conducting business of this kind. We are going to have the system to which I object in connection with the Death Duties perpetuated under the tax you are placing upon landowners. We should go in for purity of finance, and see that all the money paid goes into the Exchequer. I always thought 1053 that was the great doctrine preached from the Government Benches. When we come to the question of the valuation, it is a far easier thing to arrive at a capital tax than to arrive at those difficult valuations you are going to set up by this Bill. The landowners of the United Kingdom do not all die in one year, so that the number of estates to be valued each year is limited. In connection with the Death Duties the Revenue officials ascertain what a man's income was, and they multiply it by so many years' purchase and say that that is the value of his property. I am not a land valuer, but I could do that myself. Having found out what a man's income is, I could multiply it by 15, 20 or 30 years' purchase and say that the estate is worth BO much. Without any mathematics at all you could arrive at that. This is an entirely different question. When you come to estimate the value of land for this Increment Duty you must go through the process of separating the land from the houses on it. It may be possible to arrive at such a valuation in towns, but I can only say from my knowledge of country conditions that it will be very difficult indeed to arrive at site value when you are dealing with potato fields. A man owning a country estate will have to give the capital value of a site, and the other values as well, and thousands of ordinary land-owners will have to go to large expense in consulting solicitors and land valuers. The Chancellor of the Exchequer ought to adduce some better arguments in support of the proposal than by simply referring to the speech of the hon. Member for Sheffield, which was really against this method of valuation.
§ Mr. MUNRO FERGUSONI am quite sure it is the desire of the Noble Lord to keep the cost of these valuations as low as possible. I do not know that anything is better calculated to add to expenditure on the ubiquitous persons to whom he referred than the Amendment. I think it would be impossible to accept the Amendment, because of the cost it would entail. On the other hand, the question of the incidental methods by which the valuation shall be conducted are most intricate. I do not think it should be assumed that this new general valuation can be counted as exactly the same thing as the existing valuation for the Death Duties. It is a much bigger matter. On the estate with the regular offices the expenditure would not, I think, be large, but there are considerable classes of estates, the mineral and the building estates, without any 1054 estate officers where the expenditure might be considerable, and even in these cases I think it would be found very difficult to meet the expenditure by a deduction, as is proposed on the lines of this Amendment. The uncertainty in the matter is as to the attitude of the Inland Revenue Department and the conditions they may lay down, as they have absolute power in this matter. If there was an independent valuation, were the Inland land Revenue and the executor to appoint a valuator mutually, as is done in ordinary valuations, then I do not think the difficulty would arise. But at present it seems to me that they are absolutely at the mercy of the Inland Revenue, who could lay down any condition that they like, and that being a Department which, under the Bill, has absolute authority, might lead to great expenditure on the part of individuals in order to meet the conditions laid down by the Department. I am not quite sure that you can always be certain of the reasonableness of a Government Department. One is often told that in the case of Government Departments behind the frowning countenance you find the smiling face, but it is sometimes the other way round; and I believe that the true solution of the difficulty would be to have the valuation made by a list of recognised valuers who are nominated jointly by the individuals concerned and by the Inland Revenue. What we have to guard against is putting this tremendous power into the hands of the Department and the Department laying down its own conditions and being in a strong position to intimidate the individual.
The CHAIRMANThe discussion as to the Commissioners will come on on another Amendment, and ought not to be dealt with here.
§ Mr. MUNRO FERGUSONI did not mean to go into that. I only meant to say that the Government cannot accept the principle of the Amendment; but when we come to deal with the Commissioners we might consider whether in certain classes of cases the Government might contribute something towards the necessary expenses, in exceptional cases, I think in common justice both sides in a case of this kind ought to contribute their share of the costs. That is the ordinary rule, and I think it is a fair one. But those costs would have to be very severely restricted, or the waste which the Noble 1055 Lord (Lord Willoughby de Eresby) deprecates would be a regular pandemonium of expenditure under the clause as it would stand if so amended.
§ Mr. C. J. O'DONNELLI think that the Government might accept this Amendment at least as far as rural land is concerned. What the hon. Member for the Brightside Division (Mr. J. T. Walters) said in regard to town land is perfectly true. It is a very simple thing to value property in towns or to value whole rows of houses; and, in fact, the values of land in towns are ascertained. It is constantly changing hands, and it is a very simple thing, therefore, to arrive at what its actual value would be; but the case of the country is entirely different. You do not find rows of fields exactly alike. I am quite prepared to go as far as any Member on this side with regard to the taxation of ground values in the sense of ground rents in big towns. It is an open fact, recognised by both sides in this House, and by none more than by some distinguished Members of the Conservative party, that these vast profits which are made are legitimately made an object of taxation. But rural lands are entirely different. The conditions of rural land vary from field to field, and if the owner of land has got no other income except that derived from land the taxation on him will be extremely heavy indeed. So that while the argument of the hon. Member for the Brightside Division is correct as regard land in towns, it is utterly fallacious as regards rural areas.
Mr. F. A. NEWDEGATEI would draw the attention of the Chancellor of the Exchequer to the extreme difficulty of making this valuation with regard to minerals. It is difficult enough on large estates which have been mentioned, but in my own part of the world a company has lately ventured into business over a large area of country, which includes a large number of small owners with 50 acres here and 50 acres there, etc., and how it is possible for these people to make the valuation is in itself a matter of consideration. The reason is that it is an extremely difficult thing in mineral areas to know when these small properties will be worked. For instance, say there is a mineral area of 7,000 acres, which does exist in the county to which I belong, which has become leased to a company, and which is made up of a number of small estates, ranging from 50 to 100 or 200 acres. 1056 How on earth is the valuer to find out when 50 acres, we will say at the farthest distance from the pit's mouth, will be worth its value for increment purposes? And I venture to say that the people who own these minerals will be placed in a very difficult position, because if they do not have the valuation made on their account they are liable to have the valuation made by the Government, and they must accept what the Government says as to the value of the minerals without any appeal. And I should also like to mention another circumstance. In the neighbourhood where I come from, and where there are many minerals at the present moment being developed, there are certain agricultural estates on which coal is known to exist, and which do not belong to the great land-owners of whom we have heard so much, but belong to small country gentlemen, also gentlemen of the yeoman class. I venture to urge that it would be a very great hardship on these people if under this Increment Tax, on granting a lease or at a death, they have to pay for this valuation. It is all very well to say that the valuation can be conducted easily. It cannot be conducted easily. It is absolutely essential in valuing land that everything connected with the land should be taken into account. And, in fact, I go so far as to say that even on the great estates of which we have heard, where there are offices, it is extremely difficult for the permanent staff in an agent's office to find the true valuation of the land, although they may know a great deal about the local conditions. And I do not think that the country realises that under this Increment clause a large additional burden is going to be imposed on land-owners situated at various points from time to time in the matter of valuation of land and everything appertaining to it. And I do hope that if the right hon. Gentleman (Mr. Lloyd-George) wishes to make this Bill at all events apparently a fair Bill he will accept the Amendment which has been proposed from this side of the House, and which has got so many adherents on the other side of the House.
§ Mr. JULIUS BERTRAMI would appeal to the Chancellor of the Exchequer to reconsider his attitude, at all events so far as regards sub-section (a). I do not think very much of the objections taken by hon. Members who support the Amendment, so far as regards grants of leases or deaths, but I do think that in the case of sales expenses ought to be deducted. I 1057 may suggest one concrete case. An estate is offered for sale by auction, and the sale is abortive. Subsequently it is sold by private contract conducted by the solicitor, and, say, it is sold for £2,000, £100 of that £2,000 purchase money is set down and accepted as representing the amount of increment upon the estate since the last transaction. The expenses of the vendor in that case might easily amount to £8 16s. in respect of that £]00 alone. There would be the solicitors' charges of about £2 10s. for negotiating and carrying out the sale. There would be an apportionable share of the expenses of the abortive auction, which might be put at one-twentieth, which would be three guineas. And possibly three guineas a minimum charge for valuation of the growth of increment since the last transaction. I think it is quite possible in every case of sale that the expenses of the landowner might amount to 8 per cent. The amount of money which the vendor puts in his pocket as regards the £100 increment would be £92 instead of £100, and 20 per cent. on £92 is only £18, while 20 per cent. on £100 is £20; so that the Government would in such a case be getting 2 per cent. more actual duty upon the £100 increment than they are asking for under the Bill. I think, therefore, that in cases of sale there is a very good case made out for allowing the deductions for costs and expenses properly incurred by the vender. I do not think the case of death is quite in point. What you tax for estate duty is either the land which he has not sold or the cash which the man had in his pocket. If a man has land worth £100 and dies you charge the duty on the £100 estimate. If he sold it two days before and has received his purchase-money—that is, £100 less £8, he has only £92 cash, and he has only to pay duty on that amount. From this it would be seen that in cases of sale there is very strong reason for allowing a deduction in respect of costs and expenses properly incurred.
§ Mr. LLOYD-GEORGEWith regard to the point raised by my hon. Friend the Member for Hitchin, he was not here during the discussion when quite a similar point was raised by the hon. Member for Windsor (Mr. J. F. Mason), and I pointed out that the concession already made by the, Government more than covered all that question. My hon. Friend presupposed a transaction with an increment of £100 on a £1,000. I propose to deduct 1058 10 per cent. in every case, and in the case of £2,000, I do not propose to start charging the increment until it is over £200. That is until it is over the one-tenth of the £2,000. My hon. Friend supposed the case of £100, but in that instance there is no increment at all. That is really the answer to both these cases. If you begin to enter into an elaborate calculation with regard to the charges, at any rate they will depend upon the quality of the work, and they will vary. My hon. Friend will bear me out that it will depend on the quality of the work. Although I do not suggest there would be fraud, I have no doubt at all that the charges put down by the surveyor would never be charged to the owner, but would be made a claim for deduction. It is far better, therefore, to have a hard and fast rule of 10 per cent. to cover all these minor charges. Though in some cases that might not be enough, in other cases it would be more than enough. Having answered all the points that have been put, I do hope that the Committee will now go to a Division.
§ Mr. WATSON RUTHERFORDThis Amendment is an attempt to reduce the matter to a business proposition. I was very much struck the other day in looking over the books of a very large firm who buy and sell considerable quantities of property. I knew the amounts which the firm paid for portions of property, and I knew the amounts for which they sold several properties. When I looked at the books in regard to the amounts, I found I could not recognise the figures. I asked a question, and received an answer which conveys the very point I now desire to put to the Committee. Supposing you buy a property for £1,000, what sum of money does a business man put down as the cost? He puts down £1,020, because he has to pay £25 for the stamp and cost of conveyance, and although he has given £1,000 for the property, which is the consideration named in the deed, the actual cost to him is £1,020. Let us take the case of the sale of the same property for £1,200. The amount of the costs which he has to pay is £25. The difference between £1,000 and £1,200 is £200, and, roughly speaking, that is the increment. What, however, is the actual increment? It is £155.
§ Mr. LLOYD-GEORGEThe hon. and learned Gentleman is again ignoring the concession made by the Government. The increment in that case would be only £100.
§ Mr. WATSON RUTHERFORDI quite appreciate that you are taking off 10 per cent. I understand that the 10 per cent. is not merely going to be the first 10 per cent., but 10 per cent. in all the transactions, deducting the charges from the balance. I think that is a very great concession, and if it were intended to meet merely this question of expenses I should not have anything more to say. But I would remind the Committee, as on the very Amendment that has been moved, that every concession that has been asked for in every direction, this has been the sole reply—this particular 10 per cent. is to cover the whole position. Instead of £200 being put into this man's pocket on the transaction between the £1,000 and £1,200, the nett amount he receives is £155, and that is the amount which appears in his books, because he has to charge the expense on both transactions. I do not think you ought to pass this Bill in its present state and stereotype for all time that a man makes a nominal profit of £200, while his actual profit is only of £155.
§ Mr. SAMUEL ROBERTSIt has been said that in large estate offices expert valuers would be able to make these valuations without any expense to the owners. It is forgotten that the vast majority of people who own land in this country are small holders, and if it happens that there are minerals on their land it is absolutely necessary that they should have expert valuers.
§ Mr. SAMUEL ROBERTSI wish to refer to what was said by my hon. Friend the Member for Warwickshire (Mr. New-
§ degate). I know that there will be a very great hardship on a large number of small holders, who would be put to the expense of having to engage valuers. The Chancellor of the Exchequer will remember the Report of the Royal Commission on Mines in 1905. The line of the undeveloped coal on the east side of the Midland Coalfield is very largely extended, and there are, it is said, as many as 1,750 square miles in the county of Lincoln alone where the coal is known to exist, but is not proved. It is absolutely impossible for the owner of a small plot of land in that district to make a valuation himself. He must get expert valuers. If he tried to value himself, the probability is that he would make a mistaken valuation, and if he does that what will happen? Although the value of the property may not increase and may remain exactly the same, the Chancellor of the Exchequer is going to tax upon the mis-valuation. I hope the Chancellor of the Exchequer appreciates the point, because I believe it will apply to a very large district in this country—that land will not rise in price, and there will be no increment; but in those cases, although there has been no increase in the value of the land, yet the owner will have to pay the cost of the mis-valuation. My point is this—that it is all important that the owner of a small plot of land should have an expert opinion to assist him in the first instance. If that be so, as a matter of justice, the cost he is put to of employing a valuer and solicitor should be allowed.
§ Question put, "That those words be there inserted."
§ The Committee divided: Ayes, 104; Noes, 291.
1063| Division No. 248.] | AYES. | [5.40 p.m. |
| Acland-Hood, Rt. Hon. Sir Alex. F. | Castlereagh, Viscount | Gardner, Ernest |
| Anson, Sir William Reynell | Cave, George | Gordon, J. |
| Anstruther-Gray, Major | Cecil, Evelyn (Aston Manor) | Goulding, Edward Alfred |
| Arkwright, John Stanhope | Chaplin, Rt. Hon. Henry | Gretton, John |
| Ashley, W. W. | Clive, Percy Archer | Guinness, Hon. W. E. (B. S. Edm'nds) |
| Balcarres, Lord | Cochrane, Hon. Thos. H. A. E. | Haddock, George B. |
| Baldwin, Stanley | Corbett, T. L. (Down, North) | Hamilton, Marquess of |
| Balfour, Rt. Hon. A. J. (City, Lond.) | Courthope, G. Loyd | Hardy, Laurence (Kent, Ashford) |
| Banbury, Sir Frederick George | Craig, Charles Curtis (Antrim, S.) | Harrison-Broadley, H. B. |
| Baring, Capt. Hon. G. (Winchester) | Craig, Captain James (Down, E.) | Hay, Hon. Claude George |
| Barrie, H. T. (Londonderry, N.) | Craik, Sir Henry | Heaton, John Henniker |
| Beckett, Hon. Gervase | Dalrymple, Viscount | Hermon-Hodge, Sir Robert |
| Bignold, Sir Arthur | Davies, David (Montgomery Co.) | Hill, Sir Clement |
| Bowles, G. Stewart | Dickson, Rt. Hon. C. Scott- | Hills, J. W. |
| Bridgeman, W. Clive | Douglas, Rt. Hon. A. Akers- | Hope, James Fitzalan (Sheffield) |
| Brotherton, Edward Allen | Faber, George Denison (York) | Kerry, Earl of |
| Bull, Sir William James | Faber, Capt. W. V. (Hants, W.) | Kimber, Sir Henry |
| Butcher, Samuel Henry | Fardell, Sir T. George | King, Sir Henry Seymour (Hull) |
| Campbell, Rt. Hon. J. H. M. | Fletcher, J. S. | Lambton, Hon. Frederick William |
| Carlile, E. Hildred | Forster, Henry William | Lane-Fox, G. R. |
| Carson, Rt. Hon. Sir Edward W. | Foster, P. S. | Lee, Arthur H. (Hants, Fareham) |
| Lockwood, Rt. Hon. Lt.-Col. A. R. | Pretyman, E. G. | Thornton, Percy M. |
| Long, Col. Charles W. (Evesham) | Randles, Sir John Scurrah | Tuke, Sir John Batty |
| Lonsdale, John Brownlee | Rawlinson, John Frederick Peel | Valentia, Viscount |
| Lyttelton, Rt. Hon. Alfred | Remnant, James Farquharson | Warde, Col. C. E. (Kent, Mid) |
| M'Arthur, Charles | Penton, Leslie | Willoughby de Eresby, Lord |
| Magnus, Sir Philip | Renwick, George | Wilson, A. Stanley (York, E. R.) |
| Marks, H. H. (Kent) | Ronaldshay, Earl of | Winterton, Earl |
| Mason, James F. (Windsor) | Sassoon, Sic Edward Albert | Wolff, Gustav Wilhelm |
| Mildmay, Francis Bingham | Scott, Sir S. (Marylebone, W.) | Wortley, Rt. Hon. C. B. Stuart- |
| Morpeth, Viscount | Sheffield, Sir Berkeley George D. | Wyndham, Rt. Hon. George |
| Morrison-Bell, Captain | Smith, Abel H. (Hertford, East) | Younger, George |
| Newdegate, F. A. | Smith, F. E. (Liverpool, Walton) | |
| Oddy, John James | Starkey, John R. | TELLERS FOR THE AYES.—Mr. S. Roberts and Mr. Watson Rutherford. |
| Percy, Earl | Staveley-Hill, Henry (Staffordshire) | |
| Powell, Sir Francis Sharp | Talbot, Lord E. (Chichester) | |
| NOES. | ||
| Abraham, W. (Cork, N. E.) | Davies, Sir W. Howell (Bristol, S.) | Joyce, Michael |
| Acland, Francis Dyke | Dewar, Sir J. A. (Inverness-shire) | Kavanagh, Walter M. |
| Agar-Robartes, Hon. T. C. R. | Dickinson, W. H. (St. Pancras, N.) | Kekewich, Sir George |
| Agnew, George William | Dobson, Thomas W. | Kennedy, Vincent Paul |
| Airsworth, John Stirling | Duncan, C. (Barrow-in-Furness) | King, Alfred John (Knutsford) |
| Alden, Percy | Dunne, Major E. Martin (Walsall) | Laidlaw, Robert |
| Allen, Charles P. (Stroud) | Edwards, Sir Francis (Radnor) | Lamb, Ernest H. (Rochester) |
| Ambrose, Robert | Elibank, Master of | Lambert, George |
| Ashton, Thomas Gair | Esslemont, George Birnie | Lament, Norman |
| Asquith, Rt. Hon. Herbert Henry | Evans, Sir S. T. | Law, Hugh A. (Donegal, W.) |
| Baker, Sir John (Portsmouth) | Everett, R. Lacey | Layland-Barrett, Sir Francis |
| Balfour, Robert (Lanark) | Ferens, T. R. | Lehmann, R. C. |
| Baring, Godfrey (Isle of Wight) | Ferguson, R, C. Munro | Lever, A. Levy (Essex, Harwich) |
| Barker, Sir John | Freeman-Thomas, Freeman | Lever, W. H. (Cheshire, Wirral) |
| Barlow, Sir John E. (Somerset) | Fuller, John Michael F. | Levy, Sir Maurice |
| Barlow, Percy (Bedford) | Fullerton, Hugh | Lloyd-George, Rt. Hon. David |
| Barnard, E. B. | Furness, Sir Christopher | Lough, Rt. Hon. Thomas |
| Barnes, G. N. | Gill, A. H. | Lundon, T. |
| Barry, Redmond J. (Tyrone, N.) | Ginnell, L. | Lyell, Charles Henry |
| Scale, W. P | Gladstone, Rt. Hon. Herbert John | Lynch, H. D. |
| Beauchamp, E. | Glen-Coats, Sir T. (Renfrew, W.) | Macdonald, J. R. (Leicester) |
| Beck, A. Cecil | Glendinning, R. G. | Macdonald, J. M. (Falkirk Burghs) |
| Bellairs, Carlyon | Glover, Thomas | Maclean, Donald |
| Berridge, T. H. D. | Goddard, Sir Daniel Ford | Macnamara, Dr. Thomas J. |
| Bertram, Julius | Gooch, George Peabody (Bath) | Macpherson, J. T. |
| Bethell, Sir J. H. (Essex, Romford) | Greenwood, G. (Peterborough) | MacVeagh, Jeremiah (Down, S.) |
| Bethell, T. R. (Essex, Maldon) | Greenwood, Hamar (York) | MacVeigh, Charles (Donegal, E.) |
| Birrell, Rt. Hon. Augustine | Griffith, Ellis J. | M'Callum, John M. |
| Black, Arthur W. | Guest, Hon. Ivor Churchill | M'Laren, H. D. (Stafford, W.) |
| Boland, John | Gulland, John W. | M'Micking, Major G. |
| Boulton, A. C. F. | Gwynn, Stephen Lucius | Maddison, Frederick |
| Bowerman, C. W. | Hall, Frederick | Mallet, Charles E. |
| Bramsdon, Sir T. A. | Halpin, J. | Marks, G. Croydon (Launceston) |
| Branch, James | Harcourt, Rt Hon. L. (Rossendale) | Marnham, F. J. |
| Brigg, John | Harcourt, Robert V. (Montrose) | Massie, J. |
| Brocklehurst, W. B. | Hardie, J. Keir (Merthyr Tydvil) | Masterman, C. F. G. |
| Brooke, Stopford | Hart-Davies, T. | Meagher, Michael |
| Brunner, J. F. L. (Lancs., Leigh) | Harvey, A. G. C. (Rochdale) | Meehan, Francis E. (Leitrim, N.) |
| Bryce, J. Annan | Harwood, George | Menzies, Sir Walter |
| Buckmaster, Stanley O. | Haslam, Lewis (Monmouth) | Micklem, Nathaniel |
| Burke, E. Haviland- | Hazel, Dr. A. E. W. | Molteno, Percy Alport |
| Burns, Rt. Hon. John | Hedges, A. Paget | Montagu, Hon. E. S. |
| Burnyeat, W. J. D. | Henderson, Arthur (Durham) | Mooney, J. J. |
| Burt, Rt. Hon. Thomas | Henderson, J. McD. (Aberdeen, W.) | Morgan, J. Lloyd (Carmarthen) |
| Buxton, Rt. Hon. Sydney Charles | Herbert, T. Arnold (Wycombe) | Morrell, Philip |
| Byles, William Pollard | Higham, John Sharp | Murray, Capt. Hon. A. C. (Kincard.) |
| Cameron, Robert | Hobart, Sir Robert | Napier, T. B. |
| Causton, Rt Hon. Richard Knight | Hobhouse, Rt. Hon. Charles E. H. | Nicholls, George |
| Cawley, Sir Frederick | Hodge, John | Nolan, Joseph |
| Chance, Federick William | Hogan, Michael | Norton, Captain Cecil William |
| Cheetham, John Frederick | Holland, Sir William Henry | Nussey, Sir Thomas Willans |
| Cherry, Rt. Hon. R. R. | Holt, Richard Durning | Nuttall, Harry |
| Cleland, J. W. | Hooper, A. G. | O'Brien, K. (Tipperary, Mid.) |
| Clough, William | Hope, John Deans (Fife, West) | O'Brien, Patrick (Kilkenny) |
| Cobbold, Felix Thornley | Hope, W. H. B. (Somerset, N.) | O'Connor, James (Wicklow, W.) |
| Collins, Stephen (Lambeth) | Horniman, Emsile John | O'Connor, John (Kildare, N.) |
| Collins, Sir Wm. J. (St. Pancras, W.) | Howard, Hon. Geoffrey | O'Doherty, Philip |
| Corbett, C. H. (Sussex, E. Grinstead) | Hudson, Walter | O'Donnell, C. J. (Walworth) |
| Cotton, Sir H. J. S. | Idris, T. H. W. | O'Grady, J. |
| Craig, Herbert J. (Tynemouth) | Isaacs, Rufus Daniel | O'Kelly, James (Roscommon, N.) |
| Cross, Alexander | Jackson, R. S. | O'Shaughnessy, P. J. |
| Crossley, William J. | Jenkins, J. | Parker, James (Halifax) |
| Davies, Ellis William (Eifion) | Jones, Sir D. Brynmor (Swansea) | Paulton, James Mellor |
| Davies, M. Vaughan-(Cardigan) | Jones, Leif (Appleby) | Pearce, Robert (Staffs., Leek) |
| Davies, Timothy (Fulham) | Jones, William (Carnarvonshire) | Pearce, William (Limehous) |
| Philipps, Col. Ivor (Southampton) | Schwann, Sir C. E. (Manchester) | Verney, F. W. |
| Philipps, Owen C. (Pembroke) | Scott, A. H. (Ashton-under-Lyne) | Vivian, Henry |
| Philips, John (Longford, S.) | Seaverns, J. H. | Walsh, Stephen |
| Pickersgill, Edward Hare | Seddon, J. | Walters, John Tudor |
| Pointer, J. | Seely, Colonel | Walton, Joseph |
| Ponsonby, Arthur A. W. H. | Shackleton, David James | Ward, John (Stoke-upon-Trent) |
| Power, Patrick Joseph | Shaw, Sir Charles E. (Stafford) | Ward, W. Dudley (Southampton) |
| Price, C. E. (Edinburgh, Central) | Sheehan, Daniel Daniel | Wardle, George J. |
| Price, Sir Robert J. (Norfolk, E.) | Silcock, Thomas Ball | Warner, Thomas Courtenay T. |
| Priestley, Sir W. E. B. (Bradford, E.) | Sloan, Thomas Henry | Wason, Rt. Hon. E. (Clackmannan) |
| Radford, G. H. | Smeaton, Donald Mackenzie | Wason, John Cathcart (Orkney) |
| Rainy, A. Holland | Smyth, Thomas F. (Leitrim, S.) | Waterlow, D. S. |
| Raphael, Herbert H. | Snowden, P. | Wedgwood, Josiah C |
| Rea, Rt. Hon. Russell (Gloucester) | Soames, Arthur Wellesley | Weir, James Galloway |
| Redmond, John E. (Waterford) | Soares, Ernest J. | White, Sir George (Norfolk) |
| Redmond, William (Clare) | Spicer, Sir Albert | White, J. Dundas (Dumbartonshire) |
| Rendall, Athelstan | Stanley, Hon. A. Lyulph (Cheshire) | White, Sir Luke (York, E. R.) |
| Richards, Thomas (W. Monmouth) | Steadman, W. C. | White, Patrick (Meath, North) |
| Richards, T. F. (Wolverhampton, W.) | Stewart, Halley (Greenock) | Whitley, John Henry (Halifax) |
| Richardson, A. | Strachey, Sir Edward | Whittaker, Rt. Hon. Sir Thomas P. |
| Pidsdale, E. A. | Straus, B. S. (Mile End) | Wiles, Thomas |
| Roberts, Charles H. (Lincoln) | Summerbell, T. | Wilkie, Alexander |
| Roberts, C. H. (Norwich) | Taylor, Austin (East Toxteth) | Williams, W. Llewelyn (Carmarthen) |
| Roberts, Sir J. H. (Denbighs.) | Taylor, John W (Durham) | Wills, Arthur Walters |
| Robertson, Sir G. Scott (Bradford) | Tennant, Sir Edward (Salisbury) | Wilson, J. W. (Worcestershire, N.) |
| Robinson, S. | Tennant, H. J. (Berwickshire) | Wilson, P. W. (St. Pancras, S.) |
| Robson, Sir William Snowdon | Thomas, Abel (Carmarthen, E.) | Wilson, W. T. (Westhoughton) |
| Rogers, F. E. Newman | Thomas, Sir A. (Glamorgan, E.) | Winfrey, R. |
| Rose, Sir Charles Day | Thorne, G. R. (Wolverhampton) | Wood, T. M'Kinnon |
| Rowlands, J. | Tomkinson, James | Yoxall, Sir James Henry |
| Runciman, Rt. Hon. Walter | Toulmin, George | |
| Rutherford, V. H. (Brentford) | Trevelyan, Charles Philips | TELLERS FOR THE NOES.—Mr. Joseph Pease and Mr. Herbert Lewis. |
| Scarisbrick, Sir T. T. L. | Ure, Rt. Hon. Alexander |
Question, "That the words down to the word 'deduction' ['subject to such deduction'] stand part of the clause," put and agreed to.
The CHAIRMANThe Amendment of the hon. Member for London University (Sir P. Magnus) cannot be taken here, because we have no Undeveloped Land Duty in this clause.
Mr. BALFOURI quite appreciate the difficulty you put, but could you advise the Committee or advise my hon. Friend as to the point at which it would be in order? I should have been afraid, if we passed the Increment Duty and these earlier clauses, that when we got to the undeveloped land the question would have been regarded as having been settled, and that we should not be allowed to raise it again. Can you, in view of that, see your way to state the proper place?
The CHAIRMANI will consider the question. It cannot come in here. It can come in under Clause 10, or otherwise it could come in as a new clause. I should prefer to let it come in under Clause 10, but I cannot give a positive answer now. The next three Amendments are all settled.
§ Mr. PRETYMAN moved in section (2), after the words "subject to" ["subject to such deduction"], to insert the words "of any sum or sums paid for the redemption of Land Tax and." It is obvious that the actual value at the time when the property is being assessed for increment on the second collection has been increased by the redemption 1064 of Land Tax, or by commutation of tithes, and that that increase will have been arrived at by the direct expenditure of the owner. It is obvious, I think, that he should be debited with sums which are distinctly outgoings. I await the right hon. Gentleman's reply, and beg to move the Amendment formally.
§ Mr. LLOYD-GEORGEI understand the object of the hon. and gallant Member is to make a deduction where there is an increase in the land attributable to redemptions since the original site value. The words of the Amendment will not carry out that, which, if I may suggest, I think, is a perfectly legitimate object where it is attributable to the redemption of Land Tax. I do not quite agree with the Amendment, which, I think, ought to come in after the word "value" ["that site value,"], where I would suggest to insert the words "or the expenditure of money on the redemption of Land Tax after the 30th day of April, 1909." The hon. and gallant Member can put an Amendment down to that effect, or I shall put it down myself.
§ Mr. PRETYMANI had written in the original manuscript "Commutation of tithes," as well as "redemption of Land Tax," and I thought it was included. The point is identical, and I desire to add to my Amendment, "Commutation of tithes." The two cases are on all fours unless 1065 there may be a question of incumbrances. I am not sure if one is an incumbrance and the other is not. I am aware that the tithe is an incumbrance, and if the Land Tax is not, then I do not wish it added. Perhaps the learned Attorney-General could tell us that.
§ Mr. LLOYD-GEORGEThat is rather an important new point, which I have not had time to consider. I can assure him I shall try to think that over. If he will withdraw his Amendment here and put it down in the place I have indicated, I shall have time to consider the additional words suggested now. I am inclined to think that tithes would not be in the same position as the Land Tax. As far as the land is concerned, I fully admit the justice of the statement. I shall certainly accept the first part of it.
§ Amendment, by leave, withdrawn.
§ Mr. PRETYMAN (for Mr. Clyde)moved, to leave out the words "such deduction (if any) as the Commissioners allow in each case in respect of any part of the value which is proved to their satisfaction to be attributable," and to insert the words "the deduction of any part of the value fairly." This Amendment covers a considerable amount of ground, and is rather an important one. It really opens up the question of the Commissioners. The question of the Commissioners allowing whatever deductions they please, and accepting whatever assessments they think just is one which requires a very great deal of consideration at the hands of the Committee, because it is an entirely new principle in the assessment of taxes that there is to be a decision by an authority constituted directly under the Treasury, and the Government of the day with an appeal to another authority similarly appointed, and not an appeal on the part of the subject, who is taxed to the ordinary courts of law. I do not quite know on what ground this new departure has been taken. It is a very large new departure, which opens up very great constitutional questions of very far reaching aspects that the subject is to be liable to be taxed without appeal to the courts of law, which alone can be considered as definitely and entirely impartial. I would make this observation, which I think is justified, that in this case the whole question of taxes depends entirely on assessment. The tax itself is fixed by the Committee and by the Bill at 20 per cent. With what weight that burden of taxation will fall upon any particular 1066 subject who is liable to pay must entirely depend upon the view which the Commissioners take of what his assessment ought to be. This body of gentlemen will no doubt act under professional advice. There is no Member of this Committee who has sat on Committees upstairs who will not be thoroughly aware that professional opinion on questions of fact, particularly as to values, varies in the most extraordinary manner; it is a commonplace, and I see hon. Gentlemen opposite recognise that it is so. Take the ordinary case of the acquisition of land under the Lands Acquisition Act; there is no Member who is not aware that you will have the most extraordinary difference of expert professional opinion as to the value of certain property that is in question before a Committee upstairs. Bearing in mind the extraordinary variety of profesional opinion, I would point out that that variety of opinion will be given fullest play. Under the provisions of this Bill you are not to have one uniform valuation, conducted under the supervision of a few special experts, with a large staff acting under their guidance or under directions formulated by them; but you are going to ask every owner of land to make his own independent valuation. Each owner of land will go to a different expert. One expert may hold the view that land has a high value, while another may hold that land of a similar character has a low value. It is perfectly obvious that the Commissioners, upon whom the whole responsibility will be thrown, can by no human possibility exercise any real personal supervision over the individual valuation for which they are responsible. It cannot be pretended that there will be any real personal responsibility on the part of the Commissioners for the actual assessment of the land of any individual. Therefore it amounts to this: that without an appeal of any description, except to the referee, who, again, is an appointed officer, the subject is to pay a tax according to whatever value a particular valuer may put upon his property. That is not the principle which obtains now. There are heavy burdens of taxation thrown upon us under the Income Tax and Death Duties, but there is an appeal to the High Court in those cases. Appeals can be taken on questions of fact and of opinion in regard to both Income Tax and Death Duties. In this case that principle is departed from. I do not know on what ground that has been done unless I might suggest that the courts of law are guided by certain principles of 1067 equity, and that those are not principles which apply to this Bill. If that is so, I can quite understand that the Government do not desire to rest these matters on the decisions of courts which must necessarily be guided by principles quite foreign to the Bill itself.
The Amendment, if carried, would make no difference to the structure of the Bill. The words "subject to the deduction of any part of the value fairly attributable to the value of the buildings" appear to me to cover the necessities of the Bill, and we can at a subsequent stage provide machinery by which the valuation is to be assessed, and provide for an appeal to the High Court. The point is one of great constitutional importance, and I think the Government ought at this stage to attempt to justify the principle which they have adopted. You have on the one side the Commissioners of Inland Revenue, who are represented in the eyes of the community by the two words "Somerset House," representing the Crown, whose object is to obtain from the subject the utmost possible which the law allows. The subject, on the other hand, naturally desires to defend himself against their exactions; and in the last resort you have the courts of law, the only absolutely impartial authority available, holding the balance between them. But in this case we have a proposal under which Somerset House are put in a judicial capacity. Can they purge themselves under this tax of their natural tendency which so obviously exists under present taxes of attempting to exact the last farthing? The Chancellor of the Exchequer has said across the floor of the House, "It is not to be imagined for one moment that, because somebody sells a small field at high building value, Somerset House will claim that that value should attach to an adjoining property." I know an actual case where that very claim was made. A little piece of land adjoining a residential property of 100 acres was sold for a special purpose at a high building value. When Death Duties had to be paid on the residential property there was set up the very claim which the Chancellor of the Exchequer said would never be made, namely, that the whole property should be valued at the same rate as the particular acre which had been sold by the owner of the adjoining land. The matter went backwards and forwards for a long time, and eventually a considerable reduction on the demand was obtained. But in that 1068 case there were the law courts behind, and in this case that will not be so. There would be no protection to the subject if a claim of that kind were made for Increment Value Duty by Somerset House. That is a very serious position. The taxes to be levied under this Bill are extraordinarily complicated and difficult. The questions to be submitted to the Commissioners are hypothetical questions, questions of opinion as well as questions of fact. They are to be asked to do in many directions what has never before been attempted in matters of valuation, and obviously there will be the widest possible field for differences of opinion. Nobody can say to-day, as far as we have got with the Bill, what the tax of any particular piece of land will really be. There is hardly a paragraph in the Bill which does not contain some such words as "as the Commissioners may determine," "in the opinion of the Commissioners," and so on. There is nothing fixed except the rate of the tax. Everything else on which the amount of the tax depends is left to the Commissioners. I can give another illustration of the manner in which Somerset House exercise their powers. A valuation, on death, of the contents of a house was given to Somerset House. That valuation had been made by a valuer of the highest competence, but Somerset House refused to accept it on the ground that it was not high enough, and they sent down their own valuer. When his figures came to be compared, they were found to be lower than the original valuation. Somerset House then refused to accept the valuation of their own valuer, and insisted on payment being made according to the original valuation. These are the gentlemen who are to be given absolute power to levy taxes upon the subject, over a field of such extraordinary difficulty, where there will be such wide scope for the exercise of that rapacity which has distinguished them in many cases in connection with Death Duties. I think we are justified in saying that the subject should receive some protection. The only protection possible is that he should be able to appeal to those impartial courts of jurisdiction under which our taxation has been levied since the days when we became a free people.
§ Question proposed, "That the words proposed to be left out down to the word 'allow' stand part of the Clause."
§ Sir W. ROBSONThe speech of the hon. and gallant Member has raised two 1069 points, both of them interesting and important, but only one germane to this Amendment.
§ Lord ROBERT CECILI have handed in an Amendment to come after the word "deduction," which would be excluded by the form in which you have put the Question.
§ Sir EDWARD CARSONI also have handed in an Amendment to come after the word "Commissioners."
The DEPUTY-CHAIRMANYes; both of these Amendments have been handed in in manuscript; I will put the Question in another form.
§ Question proposed, "That the words proposed to be left out, down to the word 'if,' stand part of the Clause."
§ Sir W. ROBSONI hope hon. Members will not exercise their right of handing in manuscript Amendments more than is absolutely necessary, as it renders the task of properly dealing with them very difficult. I have on more than one occasion risen to deal with a written Amendment, and found myself mistaken as to its exact terms. The speech of the hon. and gallant Member raises two points, only one of which I submit is really germane to this Amendment. The two points are, first, the tribunal which is to make the valuation or assessment; and secondly, a quite different question—the right of appeal from that tribunal. The Amendment that is under the consideration of the Committee deals with the first point only; what the hon. Member proposes to do is to omit the reference to the Commissioners, and not to insert the name of anyone else. It, therefore, leaves the clause "subject to the deduction of any part of the value fairly attributable to the value of buildings," and so on. That means the clause standing without specifying anybody to make the valuation. It, therefore, leaves the valuation to be ascertained by a Court of Law. It substitutes litigation for valuation. You could not have a worse substitute. A more injurious suggestion to property owners than that which this Amendment proposes could not possibly have been devised. Let us consider exactly what a valuation is as compared with litigation or arbitration. In the case of an arbitration or a lawsuit the value is decided upon evidence generally by someone who is not an expert. In the case of the law courts that is invariably so. To 1070 declare every valuation under this Act—and there will be a good many of them—by means of a lawsuit is a preposterous proposal to put before the House. The same observations apply in a scarcely less degree to an arbitration. It has been universally recognised, not merely in the case of taxation, that when you are dealing with the value of property upon any extensive scale valuation is to be preferred to arbitration or litigation. The Amendment is worded in a contrary sense to that proposition. A question of appeal is a totally different thing. Where you have litigation to decide the value there is no appeal except on a question of law. On the mere valuation it is not as a rule desirable that there should be an appeal so far as the dispute is one of fact. The hon. and gallant Gentleman, scarcely with his usual justice, said a great deal about the Commissioners of Inland Revenue, and gave us some hard cases, in which he invites us to believe that they have acted unfairly. I do not think this is the experience of the country generally with regard to these gentlemen. Nobody doubts their high character and good intentions. His speech raised the question as to their efficiency for the work. We have only to look at the results of the number of valuations which these gentlemen have supervised—they do not make them personally. Their number is enormous. They have to act under the Death Duties. Section 7 of the Finance Act dealing with the tribunal in this connection says: "The value of any property for the purpose of Estate Duties shall be ascertained by the Commissioners in such a manner, and by such mean3, as they think fit."
There is the widest possible discretion given to the Commissioners, and so far as questions of fact are concerned, that discretion has certainly the effect of a final decision. I know you have a general right of appeal; but when you are dealing with questions of fact the Commissioners have such a weight with the Court that I do not think I am putting it too strongly in saying their decision is in effect final. They are a body of Commissioners well tried and proved by experience. This Amendment proposes to displace them, and put no other similar expert body in their place. I am sure my hon. Friend will see that this is quite an impossible proposal. An enormous volume of transactions come under the purview of the Inland Revenue Commissioners, and the law cases arising from them is really phenomenally small. 1071 How can it be said that the Commissioners form an unsatisfactory tribunal? They have been described as having a natural tendency to exact the last farthing. I believe they have exactly the opposite tendency. Certainly I think the taxpayer would not like to have his only remedy against the alleged injustices of the Commissioners in the shape of a costly lawsuit, that would add to the burden of the taxpayer.
§ Sir EDWARD CARSONI quite agree with the Attorney-General that the question of appeal only comes incidentally into this Amendment; but it does come in. There are two very important questions in this Amendment, and, to my mind, one of them has not been yet sufficiently touched upon. We want to lay down, I submit to the Committee, what are the deductions that are to be made. There are two different ways you may do that. You may enact absolutely that certain deductions are to be made. That is what I think this House ought to do. What you are proposing to do, and the way in which you are having the Bill framed at present, is not to do that, but to leave the matter entirely in the discretion of the Commissioners as to what the deductions may be. That is the first point, and this is a matter of very extreme importance. We ought to clearly lay down and enact what are the deductions that the Commissioners are to make. We ought not to leave it as a discretionary matter with them at all. They ought to decide upon the matter in accordance with what we have directed by Act of Parliament. It is idle to say that this wide discretion is to be left to Gentlemen who themselves are the taxing body, and who have to collect this money for the Revenue. The difference may seem small to those who are not accustomed to such things, but there is a great difference. There is nothing I object to more in this Bill than the way in which you have set up your tribunal for the assessment of these taxes. The learned Attorney-General seemed to think that to bring one of these cases into court would be entirely an unsatisfactory thing for the taxpayer. I put it to him, in all seriousness, does he think that his method is a better or a fairer one that one of the parties to the litigation should have himself to decide the whole matter? Does he really think that the tax-collector, who has to say what the assessment is to be—whose real and main duty is getting in the revenue for 1072 the Exchequer—that it is a fair thing that he should be the judge of how much he has to get in? To my mind it is a monstrous proposal, having regard to the complicated nature of this Bill, that all these various matters should depend upon the judgment of men who are themselves interested for the purpose of getting in the revenue for the Exchequer. In making that statement I am not saying anything against the Commissioners of Inland Revenue, but I think you are putting them in a very onerous and a very invidious position, because whatever has been their duties up to the present they have never had any duty cast upon them in the slightest degree analogous to the duties they will have to discharge under this particular measure. Who are these gentlemen? Do they profess to have any experience in valuing land at all? Will it be their duty when you enact that the Commissioners shall do so and so, will it be their duty to do it at all? You know perfectly well it will not. You know perfectly well that enacting that the Commissioners will do so and so does not mean they do it. There are only two or three or four Commissioners of Inland Revenue altogether, and to suppose that four Commissioners can value for original site valuation, and for original site value which has to be taken into consideration for the purposes of assessing increment—to suppose. I say, that four Commissioners can go through these mathematical calculations and perform the function put upon them by the Act of Parliament is an actual absurdity. It would take two or three hundred of them to do so; therefore let us look at the reality, and see in some practical way how this is going to be carried out.
What I suppose will be done is that the Commissioners will employ valuers, and they will send them down in the various cases to make these complicated statements on forms which will be supplied them; then they will be submitted to the Commissioners. When the valuation is submitted to the Commissioners to carry out these various duties under the Act will they be bound by that valuation? And if they will not be bound by that valuation, what is it they will be bound by? Is the whole of this matter to be carried out on guesswork? You have no provision in the Bill at all for any hearing before the Commissioners themselves. In a complicated matter of this kind you have made the Commissioners absolutely supreme, and you have not given any opportunity 1073 whatsoever to the other parties, to the unfortunate subject who is to be taxed, of being heard in relation to the matter. You merely make the tax-collector the master of the situation. The Commissioners get the valuation from whom they like, and they act upon it to the extent they like. They discard the valuation if they do not like it, and they adopt it if they do, and these gentlemen are not selected with regard to any experience in valuation at all. To tell the taxpayer in these circumstances that whatever the Commissioners of Inland Revenue say you are to be taxed at he must pay, is, I say, acting a tyranny which will be resented by numbers of taxpayers in this country.
I do not think it is at all unnatural that they should resent it. In this question of valuation, where there are so many different views as to what the value of a particular place is, and as to what a particular site value is, there will be the greatest divergence of opinion, and that there should be so is not in the least to be wondered at. I think if the Attorney-General would consult my hon. and learned Friend sitting behind him, the Member for Reading (Mr. Rufus Isaacs), who has just been eight or nine days in the law courts trying to find out what is the value of a site in Regent-street or Oxford-street, and the divergence of opinion given upon the question, I think he would find out something, because since the right hon. and learned Gentleman the Attorney-General has become an official he has probably forgotten these questions which are open to the law. It is quite true what the Attorney-General says that to have a law suit of this kind in every case would of course be impossible, but what I object to is that the tribunal you set up is a tribunal entirely unconnected with valuation or with experience in valuation, and is a tribunal which can only act upon the advice of delegates over whom neither this House nor the law courts have any control whatsoever, or have any voice in their selection, and you settle this question without any opportunity being given to the parties to be heard. The Attorney-General said that in connection with the Death Duties the Commissioners have to carry out similar functions. That is quite true; but they have always behind them—and I would like to impress this point upon the Attorney-General—the law courts. He said what I think is perfectly right, and what anybody who is familiar with these cases in his Department knows, that 1074 although there are a number of cases on appeal brought on points of law to the courts, there are very few on which questions of value arise.
Why is that the case? Because the Commissioners always have behind them the knowledge that the law courts are there and can be appealed to. Let me take a case which occurred in this House. I happen to know the case, because I was myself asked about it. It arose in reference to a Member of this House, who came in for a small property. The Commissioners of Inland Revenue sent to him saying that they valued his property at £50,000. He wrote back, and said that that was ridiculous. The Commissioners then said, "We will send down the valuer," and they did send down the valuer, and he valued the property not at £50,000, but at £15,000. Still, the gentleman was not satisfied that that was accurate, and when they wrote and told him that they had fixed the valuation at £15,000 he wrote back and said, "I do not think the property is worth more than £10,000." The Commissioners replied that they must adhere to the value as fixed by their own valuer, and he wrote back once more and said, "If you do not take the figure at £10,000, we will go into the Law Courts"; and then the Inland Revenue Commissioners finally said, "Very well, we will make it £10,000." That is what goes on, and that is the reason why there have been so few appeals; and I think it suits, and I think they are well advised in trying, to come to terms over matters of that kind. But, supposing there had been no appeal in this case, and supposing the Revenue Commissioners had said, "We must have the £50,000, we adhere to it," what would be the remedy? No remedy at all, and the subject would have been compelled to pay £40,000 too much. The Attorney-General says that the question of value is seldom, or ever, determined by the courts. I do not think the Attorney-General ought to say that. Surely he remembers the case of the Kennedy judgment.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)That was on a question of principle.
§ Sir EDWARD CARSONYes, it was on a question of principle, and on a very important principle. The Revenue Commissioners valued on the same lines as for the Death Duties for the purpose of compensation under the Licensing Act, and they fixed a certain sum. The owner of 1075 the house was not satisfied, he went to the courts, and the famous Kennedy judgment followed, and what happened? The amount was very nearly doubled. There the Revenue Commissioners were keeping it down. In these circumstances, have we not come to a part of this Bill which is of vast importance to the rights of the subject. Let hon. Members notice this question we are now discussing has nothing on earth to say to the merits or the demerits of the tax. What we want to see is that the subject shall be fairly treated, and have his rights fairly guarded under the tax you are setting up under this Bill.
To tell us now at this time of day that the proper way to enforce new taxes against the subject whom you are assessing perhaps unfairly under an Act of Parliament is to tell him you are not to be allowed to go into the law courts is, I say, a monstrous shame. In setting up a tax under these conditions if you attempt any such thing it will be resented throughout the length and breadth of the land by a combination of the owners of land—I forget how many millions there are—[An HoN. MEMBER: "One million."]——there must be more than one million; there are a large number interested in land who have to be assessed in relation to every transaction, and all these various matters—I should think I should not be wrong if I said there are a couple of millions at least, and if these people believe for one moment that the courts of law are being ousted where they never were ousted before in the cases of valuation, so far as I know—and I have looked very carefully into the matter—when the subject sees that you are for some purpose or other ousting the courts in relation to this matter and that they are at the mercy of the tax-gatherer—I say if they resent it and refuse, as they would have a right to refuse, to send in any returns or to co-operate with you in carrying out what is really a valuation or a revaluation of the whole country—then I say your Bill would become impossible, and the Land Taxes would be in a state of chaos for years to come. Unless with the cooperation of the taxpayers, you will find you cannot carry out a valuation of this kind, and a valuation which will be arising in this complicated way from day to day in every transaction and transfer of property. I say the business before you is a gigantic business, and the only way in which it can be carried out, if at all, is by as far as possible appeasing the apprehension 1076 of the taxpayer and taking him as far as possible into your confidence, and with his assistance attempting in some way or other, if you are setting up these taxes, getting him to co-operate in bringing about such a set of circumstances as will make you Bill workable.
§ Mr. RUFUS ISAACSA good many observations have been made by my right hon. and learned Friend who has just spoken with reference to ousting the jurisdiction of the courts. I cannot and that there is anything in the Amendment now before the Committee dealing with that point. The whole question raised by this Amendment is that the Commissioners should not have the jurisdiction which is conferred upon them, and the complaint is further that there is no right of appeal from the Commissioners. To those objections my right hon. and learned Friend (Sir E. Carson) added another, that he objected to the wide discretion given to the Commissioners. The difficulty is that nowhere in this Amendment is there any suggestion as to what is to be the tribunal to decide this important question of the valuation. A good many observations have been made as to the qualifications of those who should be selected, but let the Committee consider the alternative. This Bill lays down that the Commissioner's of Inland Revenue are in the first place to decide. In my observations upon this Amendment I wish to guard myself from the view which anyone might entertain in regard to my remarks that I am favouring the ousting of the jurisdiction of the courts, or that I am agreeing that there should be no right of appeal. When the proper time comes, and when the subject can be more closely discussed, I certainly think that, in regard to the Bill at present before the Committee, there should be a much more extended right of appeal given than is at present contained in the Bill. That matter, however, will come up for discussion upon later clauses, upon which, I hope, the Government will keep an open mind, and give every opportunity for the taxpayer to bring his grievance before a court of law. We may get some suggestion which the Committee will be inclined to agree will prove to be a proper safeguard for the taxpayer.
Let me now deal with the suggestion as to the tribunal which is to decide this matter, if you do not deal with IT by the Commissioners. Except for lawyers who are hon. Members of this House, I think the prospect of such a course must be somewhat appalling, and, if we take into 1077 consideration the congestion of business in the High Courts of Justice, and what would be the state of things if the taxpayer had to go to the High Court to get all these matters settled by a judge and by a jury, who would have to decide them on the valuers' evidence—if any hon. Member contemplates the number of judges necessary to deal with these questions, I venture to say there will be no more lawyers left in this House. The four Commissioners have to deal with this matter upon the valuation before them. No one suggests that the Commissioners will have to go and examine into the details of each particular case. That is a course which is absolutely impossible, which never does take place, nor could take place, nor could a judge do anything of that character. My right hon. Friend referred to a case recently before the courts. If he put forward that case as evidence of the difficulty, there is, in arriving at an agreement between valuers when called upon opposite sides I agree with him, but if it was intended as an instance of a useful way in which we might deal with questions of this character, I would ask the Committee to imagine what the burden is which is going to be imposed upon the taxpayer if he had, in regard to such a question, to litigate for eight or nine days in order to arrive at a solution which he might not think satisfactory after it had been decided by a judge and jury.
There is only one other course open, and that is arbitration. No lawyer in this House or any hon. Member who has had experience of arbitration would desire to see that tribunal established instead of the High Court. I would prefer a court of justice in full publicity to an arbitration, which is often more expensive and much more protracted. The Government might provide such a right of appeal as is given under the Finance Act of 1894. I do not commit myself to that, but such a right of appeal as is prescribed there would give the greatest control over the Commissioners. I agree with the obervation which has been made, that it is necessary, in dealing with such important matters as those which would come before the Commissioners, that there should be some control over them, so that the important points which arise, both of law and, to some extent, of fact, might be able to be brought before the tribunal. I agree that the mere fact that there is such a right of appeal of itself constitutes a safeguard. I think it is most important 1078 that you should have something in the nature of an appeal, and all I desire to say in reference to that part of my right hon. and learned Friend's speech is that. I reserve my criticism upon the question of appeal until we come to a later clause. I do not think it would be strictly in order to discuss the right of appeal now because we can only deal with it generally here so for as it is relevant for the purpose of determining whether or not you should have Commissioners to try these issues.
The real question resolves itself into this: What does this Amendment do? or any mode of bringing the matter before a tribunal to have the question decided. If it means that there is to be to say that this tax shall be "subject to the deduction of any part of the value fairly attributable to the value of buildings." It does not prescribe any tribunal or any mode of bringing the matter before a tribunal to have the question decided. If it means that there is to be litigation, then really this Amendment instead of giving something to the taxpayer, would impose upon him a most serious burden, and it would be infinitely better for him that he should have an opportunity of raising any question which may be dealt with by the Commissioners in regard to which he is dissatisfied by an appeal to the High Court than there should be substituted for it the appeal suggested by my light hon. and learned Friend. It is only a few days ago that we had an opportunity of discussing a question similar to this in Committee, when a proposal was made that there should be a body of Special Commissioners appointed to deal with the right of appeal. The Leader of the Opposition did not agree with that proposal, at any rate in so far as it proposed that there should be a body of special Commisioners appointed. I think I am accurate in stating that the Leader of the Opposition was careful to state, as the result of his long experience, how admirably the Commissioners of Inland Revenue discharged their duties, and what full confidence he had in them. Therefore, we have the best possible tribute given to the Commissioners by the Leader of the Opposition. Considering that the Commissioners are to be the tribunal in the first instance to deal with the valuation, I submit that every care has been taken to safeguard the taxpayer against any injustice which might otherwise be done by these Commissioners. My right hon. and learned Friend objected to the wider 1079 discretion which was to be given to the Commissioners. When you have once decided the first point, which is to whom in the first instance is the jurisdiction to be given to determine the value; when you have once said that this jurisdiction is to be given to the Commissioners, it follows absolutely and quite clearly that you must give them the discretion which is provided for in this clause with which we are now dealing. There is no difficulty in giving the widest possible discretion to the Commissioners, always providing that that discretion is to be exercised with a right of appeal, and, therefore, under the control of the High Courts. I submit that there is no ground for the Amendment which has been moved, and which, so far as I can follow, is based on the reasons given for the insufficient right of appeal. My submission is that the matter which my right hon. and learned Friend opposite and the hon. and gallant Member for Chelmsford (Mr. Pretyman) are so anxious to provide for would be better dealt with upon a later clause. I have great sympathy with their object, upon which I am quite certain the Government will be only too glad to listen to any practical suggestions that may be made.
§ Sir JOHN RANDLESI cannot follow the hon. and learned Gentleman who has just sat down in all the arguments which he has addressed to the Committee. He did, however, make one illuminating remark when he referred to the number of judges which would be required. It is clear that the benches on the Ministerial side of the House would not be able to supply a sufficient staff of judges to deal with the difficult and complicated cases which would probably come before the courts on appeal under this Bill. At any rate, the hon. and learned Gentleman opposite anticipates a very great amount of difficulty in carrying out this portion of the Bill. With regard to the question as to the Commissioners having these powers, it seems to me that the Amendment is directed rather to the establishment of a right of appeal rather than to depend on the sense of justice or whim or the caprice of the Commissioners. If a right of appeal is established by the adoption of this Amendment, the ordinary layman would find some satisfaction in that at any rate, and would feel that, although he might have to go before the Commissioners, he would have questions on which he could say he had a 1080 right to be heard and to be considered without the whim of the Commissioners having anything to do with the matter. In dealing with these points, the tribunal seems to me to be of the very first importance. Complicated and intricate questions are to be brought before it, questions, for instance, such as the site value of land, complicated perhaps by there being a mine on the land. There may be a colliery or an iron mine on agricultural land. The site value would be very complicated by the inclusion of minerals, which are treated as land by the Commissioners in dealing with this Act. How are you going to expect the Commissioners to deal with complicated questions when the valuers on whom they must rely can only value after very careful examination, and when they have done their very best you will find there will be other valuers who will entirely upset perhaps all the decisions that may have been come to. This is especially so in the case of minerals. There are unknown bodies of minerals lying in the bowels of the earth with buildings on the surface of the land. The buildings are valuable if those minerals are there, but, if the minerals should turn out not to be there, or not in the quantity required, they become at once of little or perhaps of no value. I, therefore, believe, as an ordinary layman, and without looking at it from the legal point of view, that as a great protection this Committee should adopt the words of the Amendment, and not leave it merely in the power of the Commissioners, but give us a tribunal so that there will be a competent court of appeal to which we can apply. In listening to the Attorney-General, I thought he was arguing that the Commissioners were not good, but that litigation would be very much worse. It seemed to be a case of putting the ordinary layman between the devil and the deep sea, and which is the devil and which is the deep sea one hardly knows. There the difficulty is, and this particular point illustrates how unnecessarily litigation difficulty and obstruction are placed in the path of a man who wants to pay his taxes in a fair and square manner without being imposed upon, or without defrauding the revenue. The object of taxation should surely be to make it easy for the taxpayer to pay his fair share and not to put him in fear that he may have to go before Commissioners, who know nothing of the circumstances of this particular case, and to compel him to pay what he ought not to be called upon to pay. So far as the 1081 tribunal is concerned, it is not satisfactory, and, so far as the appeal is concerned, it requires, as has been stated by speakers on the other side, to be given, whether now or later, as a matter for lawyers to determine. It would, however be a satisfaction to me at any rate if the words of this Amendment were adopted and embodied in the Bill.
§ Mr. WEDGWOODI am rather conscious that the speeches on both sides of the House have been somewhat outside the point of the Amendment, and I wish to say a word or two about this question of appeal rather than the immediate question which I think is almost dead. The question was raised by the right hon. and learned gentleman the Member for Dublin University (Sir Edward Carson), and by my hon. and learned friend the Member for Reading (Mr. Rufus Isaacs). They have both urged that there should be an appeal from the Commissioners, not only on points of fact, but also on points of law. The Bill already provides for appeal from the Commissioners on points of fact to an independent panel of valuers.
The CHAIRMANI allowed the question of appeal to be mentioned, inasmuch as it affects the question whether the Commissioners are a suitable body, but the hon. Member is now discussing the question of appeal by itself, and that is not in order here.
§ Mr. WEDGWOODI am merely dealing with the point raised by my hon. and learned Friend the Member for Beading.
The CHAIRMANThe hon. and learned gentleman the Member for Reading used the question of appeal in a perfectly legitimate way. He explained how and why it should be given. The hon. Member (Mr. Wedgwood) is not using it in the right way. He must not refer to the question of appeal unless he applies his argument to the actual Amendment before the Committee.
§ Mr. WEDGWOODThen I will deal with the particular question of the Amendment before the Committee, and I trust other Members speaking on the question of appeal will do so in the same way. The question before the Committee is whether the Commissioners or the Law Courts shall do the original valuation. The hon. and gallant Member for Chelmsford (Mr. Pretyman) evidently, as the moving of this Amendment shows, has a certain distrust of Commissioners in all forms and shapes, 1082 and particularly Commissioners of the Inland Revenue. It seems to me that this grievance of the hon. and gallant Member dates from a period 15 years back, when the 1894 Finance Bill was before the House. That was when Commissioners with power to value property were invented. Ever since they have been carrying out valuations almost exactly similar in character to the valuations proposed by this Bill. They have carried them out under circumstances of considerable difficulty, because they have not had the powers of getting information which this Bill provides, and all these years they have been recognised as carrying out their duties on distinctly moderate lines without penalising the taxpayer and as giving general satisfaction to the country as a whole. It is true we have had brought before us two or three cases where they have estimated wrongly, taking £15,000 instead of £10,000, or some such figure, but I generally notice that the same case is brought up over and over again by hon. Gentlemen opposite, and, if that is the only objection which can be urged against these Commissioners, I think it is a very small one, considering the thousands of cases there are for valuation for probate and estates duties, It speaks very highly for the Commissioners that they make so few mistakes, and when they do make a mistake they accept the lower valuation without going to law about it. Whether you are considering the Death Duties, Schedule B of the Income Tax, or valuations under this Finance Bill, it is all a question requiring adjustment, and this House should make appeals on points of law unnecessary. We have seen over and over again how appeals on points of law are apt to whittle away the law and introduce judge-made law instead of Parliament-made law. We want no chance of this Bill being whittled away on points of law by decisions of the High Courts, so that the Finance Bill, passed by Parliament and intended to do certain things, shall be altered by judge-made law, and made to do the very opposite things. Therefore, the Chancellor of the Exchequer, whilst standing fast on this Amendment, and making the Commissioners free so fat as it is concerned, should also be very chary in promising appeals on points of law from the Commissioners to the High Courts.
§ Mr. BOWLESThe hon. Gentleman who has just sat down, like the hon. and learned Gentleman the Member for Reading 1083 (Mr. Rufus Isaacs), has opposed this Amendment, but the two hon. Members have opposed it, as one would expect, for very different reasons. The hon. Member who has just sat down (Mr. Wedgwood) is, as we all know, a land reformer, and he opposes the Amendment because, he says frankly, for his part he is a partisan of the system of taxation by Commissioners. He desires to see the owners of property in this country taxed by Commissioners appointed by the Executive. That is his notion of the proper method of taxation. It is a notion which, I am sure, the Committee will observe with pleasure—certainly I did—is expressly repudiated by the hon. and learned Gentleman the Member for Reading, who says, as one would expect from an hon. Gentleman of his experience, that such a system as that cannot be defended, and some provision should be made which should make the system the hon. Gentleman the Member for Newcastle desires totally impossible. He says an effective appeal to the court is absolutely necessary to the proper working of the Bill. Both hon. Gentlemen, as it seemed to me, misunderstood the Amendment in one important particular. They both asserted that the Amendment ought to be rejected as it stands, because it makes no mention of an alternative tribunal, and they have both spoken as though the effect of this Amendment would be to drive everybody whose property came in for valuation under this Bill necessarily into a court of law for the making of the valuation. I quite agree that if every one of all the innumerable hundreds and thousands of valuations going on all over the country was made perforce to go to a court of law that that would be a cumbrous and an impossible proposal, but that is not the proposal of the Amendment. The question is whether the amount of the deductions to be made is to be determined finally and for ever without appeal from the Commissioners, or whether it is to be subject to an appeal to the court of law. That is a different thing. The Amendment leaves the deduction to be made, and, the deduction having been made by the valuer, [...] would no doubt come under the review of the Commissioners. It would then be a question between the Commissioners and the taxpayer as to whether the deduction made was just and sound. If the taxpayer in his discretion thought it was not, and the Commissioners still held out, then appeal would go to the court of law.
§ Mr. RUFUS ISAACSI would call the hon. Gentleman's attention to this: If the Amendment is carried, the word "Commissioner" would be deleted from the clause altogether. Who, then, in the first instance, is to make the deductions?
§ Mr. PRETYMANMay I ask the hon. and learned Gentleman to look at Clause 14. He will see that there is no mention of Commissioners; it merely states that the valuation is to be arrived at.
§ Mr. BOWLESThere is no need to quarrel over this point. What we want to do is to get at the real meaning, and to ascertain what will be the effect of the Amendment. When a man's land falls under this Bill to be valued the valuation will be made exactly as if the Amendment had not been incorporated; the owner of the land will make a simple return, the Commissioners will examine it, and it will be one of their duties to see that in the valuation deductions are made in respect of these things. The only question is whether, that having been done, the thing shall stop automatically; whether the decision of the Commissioners as to the deductions is to be final, or whether the taxpayer, supposing he thinks it to be unfair, is to be allowed to carry the matter to another court. That is the real question. I cannot quite agree with what my hon. and learned Friend (Mr. Isaacs) said. I think we certainly ought to provide an appeal. If we do not do so we are setting up again in England nothing less than a system of taxation by Commission, a system against which the whole of our history in regard to taxation has been one long protest. I do not know what impression the speech of the Attorney-General produced on hon. Gentlemen in other quarters of the House. It perfectly stagggered me to hear a Gentleman occupying a position of tremendous importance and responsibility, representing the Bar of this country, saying that, in his opinion, the courts of law are really incompetent tribunals to deal with matters of this kind. He said: "What a ridiculous proposal! What does it mean? It means that if this Amendment is carried you will substitute litigation for valuation, and nothing could be worse than that." He suggests that there is nothing simpler than valuation—"You take the value put upon you and be quiet." That is the view of the Attorney-General, but it was not the view of John Hampden. He had put upon him a valuation by gentlemen appointed by the Executive, and he preferred litigation. It was because 1085 he preferred litigation that we made so long a step towards escaping from that system of taxation by arbitrary irresponsible Commissioners which this Government of democracy and freedom is setting up—and setting up on the grounds put forward by the Attorney-General, that great authority on legal matters in this country, who has given it as his opinion that the courts of law in these matters of valuation are inferior to an irresponsible authority appointed by the Executive. This is a matter involving really grave principles. In talking about John Hampden we are not dealing with matters of musty history. We are really dealing with a point of present importance. We on these benches have spoken of the Tudors and the Stuarts, and these references have usually been received with merriment. But what was the objection to the system of taxation against which the whole of our history has been a reproach? It was that under this system you taxed the subject by the decree of a tribunal appointed by an executive, which made rules for themselves1 as they went along, and from whose decision there was no appeal. Can anyone really differentiate in principle between that system of the High Commissioners of the Star Chamber, as regards taxation, and the system which in this Bill the Government are endeavouring to set up? The Under-Secretary for the Local Government Board suggested, in an interruption, that the difference was that the Star Chamber and the High Commission taxing arbitrarily had behind them no Parliamentary authority. I agree that is the difference, but surely it makes this proposal infinitely worse. What we really have to consider is whether, at this time of day, the English House of Commons is going seriously again to set up a system which has never been set up by Act of Parliament since the reign of Henry VII, when Empson and Dudley went about the country under direct Parliamentary authority, and in a very few years raised such a storm as made their names hated. Is this Government at this time prepared to set up again under Parliamentary authority a system of arbitrary taxation? I hope not. I was astounded that of all persons a Gentleman of the position and experience as the Attorney-General should come down and say that in his opinion such a system was preferable to the ordinary courts of law, of which he is so great an ornament.
§ Mr. S. O. BUCKMASTERI hope I realise the danger of exercising too freely independent and undisciplined judgment upon this Bill. I speak quite sincerely when I say it seems to me that a man has no right to be too minutely critical of the provisions of a measure with the general principles of which he agrees. But at the same time there may be points raised which seem to point to such deep principles that we ought not to let them go by without expressing an opinion upon them. The clause now under consideration is the first clause that deals with the tribunal this Bill sets up for the purpose of determining some of the most delicate and intricate questions that have ever been raised in recent years. I am sorry I cannot quite agree with the view that the difficulty this section raises may well be postponed until we come to the consideration of the question of appeal. Suppose, on the question of appeal, hon. Members who hold the view of the hon. and learned Member for Beading are defeated. Personally, under those circumstances, I would rather accept this Amendment than have this Bill go through as drawn in its present form. If the Government will promise that the right of appeal shall be conceded, I will certainly withdraw my support from this Amendment, but until that promise is given what guarantee have we that the Government will not do what they are entitled to do—that they will not carry their Bill with-the right of appeal absolutely destroyed? I cannot be satisfied with several of the criticisms made even by the hon. and learned Member for Reading on this clause unless you give some right of appeal, a very minute and critical right of appeal from the decree of the Commissioners. This clause appears to invest them with a discretion with which no court can interfere, and the exercise of that discretion must determine matters of enormous importance to every person, rich or poor, who has to come under their jurisdiction. It seems to me, beyond all other things, we ought to show by this Bill that we have no distrust of the tribunals of the country in determining matters of this sort. I for one heard with extreme regret the observations made by the hon. Member for Newcastle-under-Lyme, who positively dreaded the criticism of an independent and, I trust, an upright judge. That is the first time in the history of the House of Commons we have ever heard such fears expressed. At any rate, it is the first time I have heard them expressed, and I 1087 must say it appears to me that the whole structure of your legislation must be strangely unstable and frail if you are afraid to have independent criticism upon it. Personally I am anxious to secure it, and I am anxious for several reasons. First, I believe that public criticism will do much to disarm opposition to this Bill; and, secondly, I am satisfied that the only way in which this Bill can be made acceptable to the people of this country, if passed in its present form, is by having the principles upon which these taxes are to be levied publicly discussed in public courts whenever occasion requires. I shall be quite prepared to accept a tribunal of the Commissioners with an appeal, but the Commissioners without appeal appear to me to be one of the most unsatisfactory tribunals which could be conceived. It is always to be remembered that the Finance Act of 1894 gave certain powers to the Commissioners which were protected by this very right of appeal. I submit the people of this country will find when this Bill comes to be discussed again that, unless they have recourse to the courts, it will take away from them the opportunity on which hitherto all Englishmen have looked with pride, the opportunity of obtaining protection against wrong from an independent tribunal.
§ Mr. J. A. CLYDEThis is an Amendment which stood in my name, and owing to no fault but my own, was not actually moved by myself. It had for its purpose two objects in view, one of these was precisely to draw attention to that feature regarding the tribunal, about which so much has been said by hon. Members who have addressed the Committee upon this Amendment. I am not going to say anything about that matter, because all that I should have said myself has been said already, and what I had to say was prompted by the same sense of the injustice of these proposals, as tinged the remarks of the last speaker with some tones of indignation, but I had also another and a different object in view altogether, not indeed wholly unconnected with the first, but still as regards its exact subject matter, quite different. I have already had occasion to ask the attention of the Committee to the fact that the two valuations of site value, a comparison of which is to be the measure of increment value, are quite different. I am not going into the details of those differences just now, but I did want to draw the attention of the 1088 Committee to this fact, that one of the most salient differences between the valuation of the original site value and the valuation which is to settle the later value, which is to be compared with the original site value—these two valuations differ vitally indeed, in this respect, namely, that the first or original site value prescribes a mode of valuation, which is compulsory on the Commissioners, which they cannot avoid, which leaves no discretion except on the pure question of amount, but prescribes for them a perfectly definite method to which they must adhere. If it is necessary to give the Commissioners any of the large powers which under any scheme I am afraid this Bill gives them, it is surely necessary to make sure that the methods which they ought to follow are prescribed and the most undesirable method to follow is to allow them to follow their own methods and to tell them that they may or may not make allowances for certain things. In this Bill, whereas the method for the first valuation is exactly prescribed and no discretion is allowed to the Commissioners in following it, exactly the opposite method is followed when you come to the second valuation. When you come to the second valuation the whole directions to the Commissioners are that they may make allowances, if any, for the following things; but there is not a single one of the items which it is suggested to them they may take into account—there is not a single one of the items which they must take into account, and the consequence is that in the second valuation the Commissioners are absolutely free, in their own discretion, to include or to exclude every one of the items, which, in the case of the original site valuation, they must include.
§ The SOLICITOR-GENERAL (Sir Samuel Evans)dissented.
§ Mr. CLYDEI am glad to see that that; is challenged, because it enables me to bring the hon. and learned Gentleman to book. If he will glance for a moment at section 14 he will see that the site value which they are there to settle is described as a site value, which means a certain thing. If you look at it the only subject which is to be deducted in the second valuation has regard to the buildings.
§ Sir SAMUEL EVANSThere are other things.
§ Mr. CLYDEI will deal with the buildings first. They are to make a deduction 1089 in respect of the buildings, but if they choose in any particular case to say "We do not think we will make a deduction," they need not do so. I should not expect that the hon. and learned Gentleman, who is accustomed to the construction of these Acts, would say that the provisions of section 14 in sub-section (4), that the Commissioners shall allow these deductions from the site value of the land—the things mentioned in sub-sections (a) and (b)—nobody would say that is the same thing, as to say that it shall be subject to such deduction (if any) as the Commissioners allow in each case. Let the hon. and learned Gentleman look at the things which in Clause 14 are to be regarded by the Commissioners as compulsory in regard to deduction, if they have any value, and compare how that is dealt with in sub-section 2 of Clause 2, where it is to be "subject to such deduction (if any) as the Commissioners allow." Every item here prescribed is compulsory for the consideration of the Commissioners under Clause 14, but they are not compulsory under Clause 2, where the Commissioners may or may not allow anything, and have an absolutely unfettered discretion.
The second purpose, apart from the tribunal I had in mind, in altering the phraseology of this particular section, was to get rid of this unlimited discretion on the part of the Commissioners, by making Clause 2 prescribe to the Commissioners what the method was they were to follow, just as section 14 does; or, in other words, to make applicable to the process of Clause 2 the same plan of giving the Commissioners definite directions to follow, which the framers of the Bill have adopted in section 14. After all, if you are going to arrive at increment value by a comparison of two valuations, is it not reasonable that, as far as possible, the two valuations should be arrived at by equal, or at least similar methods. Let the Committee observe that all this freedom given to the Commissioners to make deductions, or to refuse them, is in the second of the two valuations, which, if it is bigger, will produce an increment value, and if it is not bigger will produce no increment value at all, and the result is that by any item of deduction which the Commissioners in their absolute discretion see fit to disregard, the valuation under section 2 would be increased and the increment value would be correspondingly increased, although the elements of increment may be totally independent of the site value increment, which alone is supposed to be 1090 of any importance. Therefore it seems to me that the phraseology and the frame of this section should be the same as the frame of section 14 and tell the Commissioners in terms what they ought to do, and give them their scheme, beyond which they are not to stray. Otherwise there will be, compared with the valuation made on a definite scheme, a valuation which may be made upon any scheme whatever. The hon. Member for Reading (Mr. Rufus Isaacs) said, with regard to the idea of an appeal to the law courts, that the result of any such appeal would be to flood the law courts.
§ Mr. RUFUS ISAACSI think I said, in as plain terms as I could, that I was courting appeals in the widest possible form, but in so far as I stated it, my objection was to going to the court in the first instance.
§ Mr. CLYDEI do not think there is very much difference between us, but the hon. and learned Member talked about exhausting the legal Members, and I thought he was thinking of submitting questions of value.
§ Mr. RUFUS ISAACSNo.
§ Mr. CLYDEOh, I see. Then there is no difference between them. In Scotland, under our Land Valuation Scheme, we have an appeal to the High Court, and that appeal is unlimited, but the Land Valuation Court very seldom deals with the question of increment. But what it does do is this: it ensures that there shall be uniformity in regard to the methods employed, and it is to that Act that we owe the uniformity which exists; but I do not know of any cases which come before our land valuation courts which are anything like so difficult as those which will have to be brought forward if the present Bill becomes an Act. But the point is that the end which we secure by means of the Land Valuation Court is that no hard and fast system of valuation is prescribed at all, but when you have two valuations which must be prepared such a procedure can only be maintained by giving a definite system of valuation for each, and compelling the Commissioners to discharge their duties in each case under that system. One word more. The original valuation under section 14 is subject to revisal by the Commissioners, subject to sections 16 and 17. So is the valuation in section 2, which begins with the return of the owner and with the review by the Commissioners. Why should not the function in each case 1091 be equally definite and equally regulated? Why, in regard to the second valuation—which no doubt the right hon. Gentleman would like to see larger in order to make increment—should not the Commissioners try to make the increment value upon its true measure?
§ Sir SAMUEL EVANSThe hon. and learned Gentleman is the author of this Amendment, and he has made his speech within the strict limits of it. Other speeches have been made on both sides of the House, upon what has been brought into the Amendment upon the subject, which has been called incidental to the Amendment, viz., as to whether there ought to be a right of appeal to the Court. I am going to refrain from discussing that because I do not think we should finally dispose of it, for, as has been said, it is only incidental, and therefore in such observations as I have to make I shall abstain from discussing it until we come to the proposal that there is to be a definite appeal to the High Court. I entirely agree with the Attorney-General when he said that in his opinion the judges in courts of law are by no means the best judges of questions of fact which arise from the valuation of land or building.
The hon. and learned Gentleman (Mr. Clyde) said you have two values to make. One you have to make in accordance with the provisions of Clause 14. I take that first because it is the original site value. The other value you have to make under Clause 2, and his complaint is that the regulations for valuation, chiefly for deductions in arriving at the valuation in Clause 14, are compulsory in character, where the regulations for deductions in Clause 2 are left entirely at large in the discretion of the Commissioners. I submit that there is a complete fallacy underlying the criticism of the hon. and learned Gentleman. The criticism is made merely upon two words, as far as I can see, in Clause 14, and the whole superstructure of his speech is built upon that very narrow and slight foundation. The words are: "The Commissioners shall allow as deductions from the site value of any land," so and so, and so and so. No doubt "shall allow" means that the Commissioners, if there are any deductions to be made, allow those deductions. It is compulsory in form, but you do not, by the employment of those words to indicate compulsion, get rid of what he complains of, namely, the discretion of the Commissioners, because 1092 in Clause 14 you will find that they "shall allow" the deduction.
"Any part," and that is the offensive word which he finds "of that site value which is proved to the satisfaction of the Commissioners to be correctly attributable to——,"and in sub-section (b), "any sums which in the opinion of the Commissioners it would be necessary to expend in order to divest the land of buildings, "and so forth. Therefore, there is a discretion left in the Commissioners under each of these sub-clauses, but if they find in their discretion that there ought to be these deductions, no doubt the clause makes it compulsory on them to allow the deductions.
Now I come to Clause 2, and I submit that the hon. and learned Gentleman seeks to deduce a great deal too much from the words "if any." That does not import to the Commissioners a further discretion if those words were not in. There are several matters dealt with here, a deduction in respect of what is attributable to the value of buildings, a deduction in respect to goodwill a deduction in respect of other matters personal to the occupier, and so forth, subject to such deductions, if any, as the Commissioners allow in each case in respect of these matters. I have no hesitation in saying that these rules are as binding upon the Commissioners as the rules which are set out in Clause 14. The words "if any" do not import any other discretion under Clause 2 than they have under Clause 14. It may be said—and this argument I could understand if hon. Gentlemen were bold enough to bring it forward—that although the Acts of Parliament indicated to the Commissioners the deductions they ought to make, they nevertheless may thrust them entirely aside. That is not the argument of the hon. and learned Gentleman. The conclusion of the matter, I think, in Clause 2 is that if there are any of these matters in respect of which deduction ought to be made, it is the rules and regulations laid down in the Act of Parliament which will compel these Commissioners to make the deduction.
§ Sir S. EVANSThey themselves. Who will compel them under Clause 14?
§ Mr. CLYDEDoes the right hon. Gentleman mean that if the Commissioners disregarded express directions in Clause 14, and then an attempt was made to levy the tax on that basis, the tax could not be successfully resisted in the courts of law?
§ Sir SAMUEL EVANSIt follows from that there is an appeal in every case now if that is so, but that is not so in my judgment. When I say the Commissioners themselves will have to decide, I mean that they will be told it is their duty to make these deductions according to the principles laid down in the clause, and you cannot import wholesale discretion which they can use or not, just as they please, from the insertion merely of the words "if any," or from the form of words of the clause as it stands. The result in each case, whether it be of valuation under Clause 2 or under Clause 14, would be exactly the same. If the deduction is not made which ought to be made in the one or in the other there is an appeal from the Commissioners to the referee. That is, I think, under Clause 22. Then we have provided already that the referee himself, where there is a refusal to allow deductions, may state a case for the opinion of the courts.
§ Lord ROBERT CECILI am not quite satisfied with the view of the hon. and learned Member (Mr. Rufus Isaacs), though I quite agree that what we want is an appeal to the courts to control the jurisdiction of the Commissioners. Where I differ from him is in thinking that, unless some such Amendment is carried, the objects that he and I have in view cannot be carried out, and it seems to me that these words which it is proposed to omit give, and are intended to give, to the Commissioners absolute discretion as to whether they shall or shall not admit these deductions. The words are extremely wide and precise in that respect. Not only is the deduction, if any, to be as the Commissioners allow, but it is to be proved to their satisfaction. Assume that you gave an appeal by those words, simpliciter, and said there should be an appeal to the courts, would it not be an answer by the Commissioners to say "this was proved to our satisfaction." It is no use your going on to say "it ought not to have been proved to your satisfaction." In fact, it was, and your appeal is disposed of. We have exercised our discretion, and the only thing you can go to the courts about is to see whether the Commissioners have not exercised their powers of discretion fairly and properly. The moment they can satisfy the court that they had exercised their discretion—that is the end of the appeal, and the matter cannot be carried any further.
§ Mr. RUFUS ISAACSWould it make any difference supposing you eliminated altogether these words "to their satisfaction"? In every case, wherever the matter is tried, the court will say it has been proved to their satisfaction. It means nothing more than that.
§ Lord ROBERT CECILThat very interruption shows that these words are absolutely meaningless, and if they are meaningless, why are they there? A Court would say at once these words must have some meaning. They give the Commissioners complete discretion in the matter, and no appeal lies the moment they have exercised that discretion. If these words are meaningless, and they do not carry the matter any further, let the Government accept the Amendment lower down and strike the words out of the clause. The question is whether by the words as they stand you are not cutting out the appeal to the courts, or at any rate jeopardising it. That is my view of the effect of the words, and I press upon the Committee the enormous importance of giving a really satisfactory and clear appeal to the court without any possibility of doubt. I desire to appeal to hon. Members opposite to look at the legislation of recent years, and consider how, in Act after Act, we are perpetually giving uncontrolled discretion to some Department of State or other. It is becoming a very serious public evil. The hon. Member for Norwood (Mr. Stewart Bowles) referred to the days of the Stuarts and the Tudors, but in reality the tyranny of an absolute monarchy is much less dangerous to the liberty of the individual than the tyranny of the democracy, because behind the absolute monarch you always have an appeal to the people at large. Ultimately, the absolute monarch, be he ever so absolute, can never defy the people whom he governs if they are really determined on any course of action. But you have no appeal from a democracy at all. You cannot go to any other power behind them and demand justice. Therefore, it is essential that democracy itself should take care that nothing that it does is liable to create injustice to the individual. I press this matter very earnestly. I do not wish to import party prejudice into the matter, but we feel bitterly that in some recent cases the Executive charged with judicial functions has not exercised them in a judicial manner. The Swansea case has burned very deeply into the minds of some of us, and we are not disposed without 1095 struggling to the utmost to confer upon the Executive uncontrolled power for dealing with the property and liberty of the subject.
§ Mr. W. P. BYLESI am not surprised that the Noble Lord should be afraid of the democracy of the country and should express his candid preference for an absolute monarchy. I am not afraid of the democracy. If the monarch of the country, acting through his constitutional Ministers, should do an injustice to the people of the country the people of the country would very soon bring them to book. The argument on this Amendment has been largely conducted by lawyers, but I should like to express to the Committee how it strikes a plain man. Taxes in this country are levied and collected by the Government, and those who pay them have very little to say about the amount of them. It may be necessary in certain cases, perhaps in this case, to have a right of appeal, but to pretend that courts of law should settle the amount of a tax which is levied by the State is, to me, to set up an impossible machinery. Taking that view, I hope I am not saying anything disrespectful to the memory of John Hampden, who was quoted against this side of the House a little while ago by the hon. Member for Norwood (Mr. Stewart Bowles). It is just because we have faith in the people of this country that we are not afraid of what John Hampden was afraid of in his day. The same hon. Gentleman referred to "Somerset House" as a modern Star Chamber. I am bound to say that I have never observed any conduct on the part of officials there which entitles them to the characterisation which the hon. Member gave them. I make bold to say that the King, subject to his Ministers, is in regard to this Amendment and in regard to the whole of the Increment Tax, in precisely the same position to the people that a landlord is in to his tenants. The landlord of an estate has certain tenants occupying his various farms. Suppose that a town arises in the neighbourhood or a railway is brought near it, or there is a market opened, or some other circumstances occur which raise the value of the farms, the landlord puts up the rents. The tenant has no right of appeal against his arbitrary power. I maintain that the King is in precisely the same position towards his people. The theory is that the Monarch grants an estate in land to a certain landlord. If the value of that land 1096 has enormously increased, as is postulated in the Government proposal, surely it is within the power of the nation to put a good tax upon it. The machinery of the Government, acting for the Monarch, is the proper machinery to determine what the amount should be. Otherwise the land of the country has gone away from the people of the country. We have been hearing much of intolerable injustice, but it would be the greatest of all intolerable injustices not to allow this Increment Tax to be imposed.
§ Mr. LLOYD-GEORGEI have not heard the whole of the discussion, but I have heard a great deal of it. I do not want to discuss the question of the appeal at this stage. I do not wish to prejudice that question. The Noble Lord seems to think that if we leave in the words "to their satisfaction" it will be quite impossible to consider the question of the appeal on its merits when we arrive at that stage, because these words would give a certain sanction to the action of the Commissioners and would limit the power of the Court of Appeal. I agree that we ought not to prejudge this very important question, and I am quite willing to consider the point urged in regard to the appeal. If the Noble Lord is of opinion that the leaving of the words "to their satisfaction" in this clause would prejudice the very important question in regard to the appeal which will have to be decided, I am quite willing at this stage to leave them out. That will leave it open to the Committee afterwards to consider the nature of the appeal and of the tribunal for hearing the appeal. Therefore if that would meet the view of the Committee I am perfectly willing to omit the words.
§ Mr. LLOYD-GEORGEWill the proposal I have made prevent the discussion later on of the question of the appeal?
The CHAIRMANI do not think it would. I certainly have not formed the opinion that it would prevent the subjects on which appeals can be made from being increased.
§ Lord ROBERT CECILThe Amendment I have to move is in manuscript, and 1097 I am afraid some inconvenience may have been caused to the Government through its not being on the Paper. I move to insert after the word "deduction" ["subject to such deduction"] the words "as shall equal any addition to the value caused by a general rise in prices estimated by reference to an index number to be fixed by the Board of Trade, and such." The object of the Amendment is to secure that the increment value shall be charged not on a fictitious improvement in value, but on a real improvement in value. It is obvious that it may well happen that the fact that property appears to be worth more than it was worth when the original site value was taken may be due not to communal or other reasons of that nature, but to the fact that the price of everything has gone up. A reference to history will show what I mean. If you go back a couple of hundred years you will find that land instead of being worth £100 per acre was worth 50s. per acre, or it might be £10. That is possibly because money has become less valuable than it was in those days. It is unnecessary to elaborate that point, because another discussion which took place some time ago made us familiar with the unwisdom of comparing the amounts of exports in one year with the amounts in another year, unless you have regard to the prices which prevailed as to these particular exports. It is equally true of land that the prices go up and down. When you say that the value of money is less now than in former times, all that is meant for the purpose of this discussion is: How many golden sovereigns have you to hand over in order to get a particular piece of land or a particular interest in land? It is essential if you are to compare that you must have regard to that matter. You may charge a tax on a nominal value, whereas the true value is estimated by the price of other commodities. That is the only true way of getting at the value of land. I think the question raised by this Amendment is one of substance, which ought to be dealt with in some way by the Government. It is not my own invention, it is derived from a letter by a Cambridge professor, which I know the Prime Minister is familiar with, because he has quoted from it in a public speech. It is the letter dealing with the windfall theory, which we discussed at considerable length yesterday. Even if the Government do not see their way to accept these particular words I hope they will, at any rate, meet my point in some way or 1098 other. I may remind the Chancellor of the Exchequer that the idea of making a tax dependent on prices generally is not a new one. The land tax used to rise and fall with the price of corn, and tithes to this day rise and fall in the same manner. If that idea had any value as applied to ordinary taxes, it is of particular value here, for you are taxing not a man's general property, but the profit he makes on a particular kind of transaction.
§ Mr. LLOYD-GEORGEOf all the remarkable Amendments moved to this Bill I think this is the most amazing. I can quite understand why the Noble Lord has only moved it in manuscript. If he had seen it in print I am perfectly certain he would not have got up and moved it. It is difficult for me to deal with the Amendment in language which will pass muster with the Chair. What does it mean? Our tax is to depend on prices according to some index number fixed by my right hon. Friend the President of the Board of Trade.
§ Lord ROBERT CECILNot by the President of the Board.
§ Mr. LLOYD-GEORGEThe Noble Lord cannot possibly have considered what the Amendment means.
And it being a quarter past eight of the clock, and private business being set down by direction of the Chairman of Ways and Means under Standing Order 8, further proceeding was postponed without Question put.