HC Deb 19 October 1909 vol 12 cc205-57

(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—

  1. (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
  2. (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
  3. (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
  4. (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 as ascertained for the purposes of the assessment of duty under this Act;
subject to such deduction (if any) as the Commissioners allow in each case in respect of any part of the value which is proved to be attributable to buildings, structures, or other things of which the land is deemed to be divested under this Act for the purpose of ascertaining the site value, or to any matter in respect of which a deduction may be allowed under this Act in estimating that site value, or to the expenditure of money on any redemption of land tax or of any rentcharge as defined in this Act effected after the thirtieth day of April nineteen hundred and nine, or to goodwill or any other matter which is personal to the owner, occupier, or other person interested for the time being in the land, and, in the case of agricultural land the value of which is due solely to its capacity for agricultural purposes, also, in respect of any part of that value which is proved to the Commissioners to be attributable to works of a permanent character, executed by or on behalf or at the expense of any person interested in the land, or to the good husbandry of any person in occupation of or interested in the land.

(3) The Commissioners shall record all allowances and deductions made under this Section.

(4) 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 on which duty is to be assessed and the remaining part of the land in such proportions as the Commissioners determine. On the application at any time of any person entitled to the fee simple of or to an interest in any land, the Commissioners shall apportion or reapportion the original site value of the land amongst such parts of the land as may be specified in the application in such proportions as they think just, and shall give a certificate of any apportionment or reapportionment so made. The value attributed on any such apportionment or reapportionment 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.

(5) Where the owner of the fee simple of any land, or any person entitled to an interest in the land, proves to the Commissioners that he, or any of his predecessors in title, has acquired for a consideration, being money or money's worth, the fee simple of or interest in the land within twenty years before the thirtieth day of April nineteen hundred and nine, and that the total value of the fee simple of the land, as calculated on the basis of the value of the consideration then given, exceeds the total value of the land as first adopted for the purposes of this Part of this Act, after deducting any part of that value which is attributable to works of a permanent character executed since the purchase or acquisition, or where the mortgagee of any land proves that he or any of his predecessors in title has advanced upon mortgage on the land an amount which exceeds that total value, such sum shall be substituted for the purposes of Increment Value Duty for the original site value of the land as the Commissioners determine, having regard to the total value as so calculated of the fee simple or the amount advanced on mortgage as the case requires, was at the time the site value of the land.


moved, in Sub-section (1), after the word "land" ["the increment value of any land"], to insert the words "exclusive of the minerals comprised therein."

I move this Amendment to ascertain from the Chancellor of the Exchequer if it is absolutely clear that minerals are not included in this Clause. We want them excluded, because they are already subject to the Mineral Rights Duty, and they are of an unknown quantity. You cannot define them, and you cannot get any reliable information even from the Government offices. There are no maps or surveys that give absolutely definite information. According to the Government's survey, a railway made in Staffordshire; should have cost £150,000, but the actual cost was £200,000. The geological survey was wrong, the subsoils were wrong, and even the minerals below were wrong. I can go further than that. I can tell you of an ironstone estate in Staffordshire where the seams started at two feet and gradually worked out until nothing at all was obtained, yet they were shown on the Survey as being of uniform thickness. Now, minerals are often also under the land, but are not owned by the surface owner, and cannot be either sold or worked by him. On these three points I think I can show that they are of unknown quantity, and I move this Amendment so that the matter may be finally cleared up by the Chancellor of the Exchequer.


Where the minerals are being worked, as the hon. Member knows very well, there are special provisions in the Bill dealing with cases of that kind. But he is referring, I take it, to the case of unworked minerals, and he asks that the mineral value in land shall be excluded for the purposes of Increment Duty. We cannot possibly agree to that, and I think he will see the reason why. Suppose he has a farm in a mineral district. Its value to-day may be £2,000. But if a colliery is opened anywhere in the neighbourhood the value of the land, it being on the coal measure, would probably go up, and it might be worth, in five or ten years, as much as £10,000. That increased value is attributable to the fact that it is a farm on the coal measure. Its position gives it that special value, and there is no reason why it should be exempted from the Increment Duty. We cannot, therefore, possibly agree to this Amendment.


I do not know that this point has been fully debated, because an alteration in the method of the collection of Mineral Duty has been introduced since the Clause was originally debated; therefore, these points have never been discussed in their new relation to each other. But I should like to point out to the right hon. Gentleman what the effect of this tax now is. Where minerals are not worked they are liable, under the conditions which he has stated, to pay on a capital value which is entirely problematical. I admit there are districts where it is pretty certain what amount of minerals underlie the land, but there are other districts where the amount is extremely uncertain. I admit further that the value is to some extent affected by that uncertainty, and therefore the value is not so high where the uncertainty obtains. If the Increment Duty were only collected after sale there would be no great hardship, assuming the tax is to be imposed in this form. If it were taken only on sale or realisation there could be no hardship on the seller, because he would realise the value, and would only have to pay the tax out of that realised value when he sold. But the tax is not only payable on realisation. It is leviable on death. Minerals are not now, unless they are being worked, taxed for Death Duties.


The hon. and gallant Gentleman is perfectly wrong. I stated explicitly that unworked minerals were valued for the purpose of Death Duties. In consequence of questions which were asked, I made further inquiries, and I found that, as a matter of fact, all mineral property, whether worked or unworked, is valued at the present moment.


That only makes the matter worse. You have a 20 per cent. tax on the problematical value levied at death. At present, as the matter now stands, with the new Mineral Tax imposed, you have an annual Increment Tax of 4s. in the £. From the moment the minerals began to be worked 4s. in the £ will be received by the State. Surely it would only be reasonable to defer making your claim until that moment arrives. You first claim the problematical increment on death, and afterwards you claim 4s. in the £ as increment on sale. That seems to be a most unreasonable proposition. I suggest that this Amendment is absolutely reasonable. It may require some modification, because, as the words actually stand upon the Paper, they would affect the method of the collection of the annual Increment Tax. But that difficulty can easily be dealt with if the right hon. Gentleman will only agree to accept this reasonable proposal, instead of imposing what we consider to be an unreasonable and unnecessary hardship as between the State and the individual.


Surely the example given by the Chancellor of the Exchequer amounts to double taxation. It may not be the intention of the Government, but, in my opinion, it is a case of double taxation. The right hon. Gentleman gave as an illustration a farm valued at £2,000, and said that because it happened to be on the coal measure its value rose to £10,000. If he is taxing that increased value he is actually taxing the coal which is underneath the farm, but when that coal comes to be worked, and the fact that it can be worked is the only element which gives it increased value, then you tax it again by imposing the Minerals Bights Duty.


Does the Noble Lord suggest when it comes to be charged the Minerals Rights Duty and the Increment Duty, under Clauses 22 and 23, that it reverts to the original site value? That is not the ease. The comparison then is between the amount of the lease and the amount of the duty chargeable at death. It is not charged in both cases.


What I understand my hon. Friend to ask was not in regard to the Increment Duty, as to which the right hon. Gentleman's explanation is perfectly correct, but as to the residue which exists. The Mineral Rights Duty is charged on the whole in the case where the Increment Value Duty is payable annually. The increment value is claimed on the capital value before the minerals are worked. It is taken over the whole area, and the Mineral Rights Duty is also claimed on the minerals again when they are worked. Therefore I say the tax is imposed twice over.


The Mineral Rights Duty of 5 per cent. has nothing whatever to do with the Increment Value Duty. It only refers to existing contracts and with regard to existing contracts no duty is charged at all with respect to minerals. Take first of all the valuation of a mineral property this year at £2,000. Ten years hence that property may have gone up in value by £8,000, purely because of the minerals in it. If the owner dies the Death Duties are paid on the basis of the £10,000—that is, on the increment of £8,000. A year after a lease may be granted. The duty is then charged not in comparison with the £2,000 but in comparison with the £10,000. There is no increment in reference to the £8,000; as far as that increment is concerned there is absolutely no charge at all in respect of it. I understood the Noble Lord to complain that we were charging increment twice over. The 5 per cent. duty is purely a duty on royalties; as far as increment goes we are not charging twice over, for the reason that there is no increment in comparison with the last date.


All this confusion arises entirely from the fact that when we considered this Clause in Committee the Mineral Rights Duty did not exist at all. Nobody dreamt of it. The present Mineral Rights Duty is altogether a different thing. What is complained of now is this: That, supposing minerals are still to be calculated, this Amendment is not going to be accepted. The effect is that upon the same minerals the Government will proceed to get not merely the Increment Duty, but also a duty upon royalties and rents received, which are really the purchase price of those minerals when they come to be sold. That is the point of which we, on this side of the House, are complaining. The illustration given by the Chancellor of the Exchequer himself is a very apt one. It is capable of being put, I venture to think, from an arithmetical point of view, very strongly to the conscience of the House. Here is a farm worth £2,000 That is the value put on it, because everybody is under the impression that there are no valuable minerals under it. A few years after it turns out that there are valuable minerals under the property, and its value is suddenly increased by £8,000, giving a total value of £10,000. The owner dies without having worked or opened up these minerals. What then is the position? He has not only got to pay a Death Duty on £10,000, the present value of the property, but, if we pass this Clause in this shape without amendment, he has to pay one-fifth of £8,000, that being the increment which has been discovered to be the additional value of this property, and then, having paid duty with money out of his cash—of course he had to get it somewhere else—he has perhaps to part with the coal—I do not know whether the Government is going to buy coal as well as land—he has to part with part of the property to pay this impost upon something for which he is getting nothing more. Then two years later or three years later—this is the case which is put—this property is leased. It really is not a lease, however, at all. It is a sale of £8,000 worth of coal to be taken out of that property over a period of years and paid for as it is got, but when that bargain is made the Government will come forward with the Mineral Rights Duty, about which we did not know anything when we were discussing this present Clause, and take a big toll out of these royalties in the form of a big slice out of the purchase price of the coal which is being sold. Our complaint and the ground of the Amendment is this, as I understand it, that if this Amendment is not accepted the Government seek, and will in effect get, two cumulative duties out of property, and in respect of one of them those who pay will actually pay upon the amount of the duty which was collected before. We consider that a very hard case. We consider it a monstrous case for those portions of the country which happen to have minerals to have the burden of paying duty at death upon minerals discovered prior to the death, but not worked, and then to be faced with another duty immediately those minerals are turned to some good account for the benefit of the community. It is not only an unbusinesslike but a very objectionable form of taxation, and it is unjust because it takes two taxes out of the same subject-matter, which, on the original drafting of the Bill, we were not informed would be taken. It is for that reason that I support the Amendment of my hon. Friend.


I think the Chancellor of the Exchequer will see really that he has not quite met the point. Take the simple case of a mineral property of the kind which is instanced. The owner of that property dies before the lease is given; in that case the property pays an Increment Duty of 20 per cent. in a lump sum. Immediately after the death of the owner and the payment of this 20 per cent. in a lump sum the property is leased. His successors then have to pay the Mineral Rights Duty at 5 per cent. That property has paid a lump sum on an increase of value, and there is no subsequent increase of value, but there is 5 per cent. duty placed upon it. Take the same property in which the death of the owner takes place after, and not before, the lease has been made. Before his death he has leased, and thereafter the property pays not only the Mineral Duty, but the Increment Duty, which run together—one is merged in the other. It does seem to me, in the case of the property where the two taxs are merged, it pays a less amount than in the case of the property in which a big capital sum is taken and there is a big Mineral Duty. I may be wrong, but I think I put my point at all events quite plainly, and I should like a reply from the Government upon it. It is the case of property identically situated. In one case the owner dies before the Mineral Duty is chargeable and before the minerals are being worked, and he has had to pay Increment Duty in a capital sum. In the other case, where the property is similar, before the lump sum is paid there is a lease and an annual charge subsequently made under the Mineral Rights Duty with which is merged, failing accommodation, anything in the nature of the Increment Value Duty. It does seem to me that these two properties do pay contributions to the Exchequer on different principles and in different amounts.


I think the right hon. Gentleman will find that that is not quite so. Take the two cases he has given, and he very fairly stated the dilemma. The first is the case where the owner of the mineral rights dies before the lease, and the second is the case of the owner of the mineral rights leasing and then dying. In the first case his successor would pay upon £8,000, 20 per cent. upon which amount would be £1,600. But if the lease came subsequently, he would pay 20 per cent. on increment over and above the annual value of the £10,000. I think it may be assumed in the vast majority of the cases that property, once it is opened up, the money which is spent upon it will produce an annual equivalent, that is, an annual equivalent of the property before it is opened up. That really is rather a theoretical point. It is true he pays the 5 per cent., but it is merged in the increment, and in that case he gets the full benefit. [HON. MEMBERS: "No, no."] Certainly he would. I am taking the case of the property after death having an increment, the increment which would be paid would be an annual increment value and the 5 per cent. Mineral Rights Duty would be merged in that, so that the successor would get the full benefit of the merging exactly as the other does. Secondly, the case is made that immediately before his death the owner leases—the lease is granted before the death of the owner. In that case the increment becomes an annual increment from the moment the property is worked, and the owner gets the benefit of the merger, and he only pays on exactly the same value as the other one. There is the same increment in both cases, the same charge, and the same merger, and I fail to see why one pays more than another. They both get the benefit of the same provisions and the same charges are made. There is the same increment, the same Mineral Rights Duty, and the same merger in both cases, and I think the right hon. Gentleman, if he worked it out, would find that it is exactly the same in both cases.


I think the right hon. Gentleman has not exactly interpreted the effect of the Bill in the two cases. Of course, he is right about the second case, that is the one in which the death occurs after the lease. In that case the Increment Value Duty accrues upon the death, and is payable in instalments, and it is quite true that the Mineral Rights Duty merges in these instalments. In that case nothing is paid except the Increment Value Duty. But I think he is wrong about the first case, in which the owner dies before the lease is granted. In that case, upon the death of the owner, the full increment value duty is paid in a lump sum, and, therefore, the owner has paid 20 per cent. of the value of the minerals discovered since the original valuation. He has, therefore, paid one-fifth of the whole of the capital value of the minerals. Then comes the lease, and the minerals axe got, and then in a later Clause there is another tax in addition to his 20 per cent., and that is 5 per cent. on the value of the minerals as they are got. While in the one case the man has paid 20 per cent. in all, in the other case he has paid 25 per cent., and he has therefore paid a double duty upon the minerals, and all that is of course in addition to the Death Duties and the Income Tax, so you are piling upon these wretched mineral owners tax upon tax, and making the industry of getting minerals less and less profitable. I may be right or wrong in what I have said. I think I am right, although I do not claim to be quite sure about this Bill, because it has been so greatly complicated since it was brought in, that one is not quite certain whether he has perfectly collated one Clause with another. We must not forget, however, that when Clause 2, which we are discussing, was brought in the Bill contained the Un-gotten Mineral Duty, and that I think is

the reason for the confusion and want of adequate understanding of the effect of the two clauses. I am convinced, however, that unless this Amendment is accepted you will get an additional duty in one case which you will not get in the other.

Question put, "That those words be there inserted."

The House divided: Ayes, 75; Noes, 195.

Division No. 810.] AYES. [8.0 p.m.
Acland-Hood, Rt. Hon. Sir Alex. F. Foster, P. S. Randles, Sir John Scurrah
Ashley, W. W. Gardner, Ernest Ratcliff, Major R. F.
Balcarres, Lord Gordon, J. Rawlinson, John Frederick Peel
Baldwin, Stanley Goulding, Edward Alfred Remnant, James Farquharson
Balfour, Rt. Hon. A. J. (City, Lond.) Gretton, John Renwick, George
Banbury, Sir Frederick George Haddock, George B. Ridsdale, E. A.
Baring, Capt. Hon. G. (Winchester) Hamilton, Marquess of Roberts, S. (Sheffield, Ecclesall)
Beckett, Hon. Gervase Harrison-Broadley, H. B. Rutherford, Watson (Liverpool)
Bertram, Julius Hay, Hon. Claude George Salter, Arthur Clavell
Bignold, Sir Arthur Helmsley, Viscount Scott, Sir S. (Marylebone, W.)
Burdett-Coutts, W. Hill, Sir Clement Sheffield, Sir Berkeley George O.
Carlile, E. Hildred Hills, J. W. Smith, Abel H. (Hertford, East)
Cave, George Kimber, Sir Henry Smith, F. E. (Liverpool, Walton)
Cecil, Evelyn (Aston Manor) King, Sir Henry Seymour (Hull) Starkey, John R.
Cecil, Lord R. (Marylebone, E.) Lambton, Hon. Frederick William Staveley-Hill, Henry (Staffordshire)
Clark, George Smith Lowe, Sir Francis William Stone, Sir Benjamin
Cochrane, Hon. Thomas H. A. E. MacCaw, Wm. J. MacGeagh Talbot, Lord E. (Chichester)
Courthope, G. Loyd Magnus, Sir Philip Valentia, Viscount
Craig, Captain James (Down, E.) Moore, William Walker, Col. W. H. (Lancashire)
Doughty, Sir George Morpeth, Viscount Walrond, Hon. Lionel
Douglas, Rt. Hon. A. Akers- Morrison-Bell, Captain Williams, Col. R. (Dorset, W.)
Duncan, Robert (Lanark, Govan) Newdegate, F. A. Wortley, Rt. Hon. C. B. Stuart-
Faber, George Denison (York) Nicholson, Wm. G. (Petersfield) Younger, George
Fell, Arthur Parkes, Ebenezer
Fletcher, J. S. Pease, Herbert Pike (Darlington) TELLERS FOR THE AYES.—Mr. Stanier and Viscount Castlereagh.
Forster, Henry William Pretyman, E. G.
Abraham, W. (Cork, N. E.) Cleland, J. W. Harvey, A. G. C. (Rochdale)
Alden, Percy Clough, William Harvey, W. E. (Derbyshire, N. E.)
Allen, A. Acland (Christchurch) Cobbold, Felix Thornley Haslam, James (Derbyshire)
Allen, Charles P. (Stroud) Collins, Sir Wm. J. (St. Pancras, W.) Haslam, Lewis (Monmouth)
Armitage, R. Corbett, A. Cameron (Glasgow) Haworth, Arthur A.
Astbury, John Meir Corbett, C. H. (Sussex, E. Grinstead) Hazel, Dr. A. E. W.
Atherley-Jones, L. Cotton, Sir H. J. S. Hedges, A. Paget
Baker, Sir John (Portsmouth) Crosfield, A. H. Helme, Norval Watson
Balfour, Robert (Lanark) Crossley, William J. Henderson, J. McD. (Aberdeen, W.)
Baring, Godfrey (Isle of Wight) Curran, Peter Francis Henry, Charles S.
Barnes, G. N. Dalziel, Sir James Henry Herbert, Col. Sir Ivor (Mon. S.)
Barry, Redmond J. (Tyrone, N.) Davies, M. Vaughan- (Cardigan) Herbert, T. Arnold (Wycombe)
Beale, W. P. Dewar, Arthur (Edinburgh, S.) Higham, John Sharp
Beauchamp, E. Duckworth, Sir James Hobart, Sir Robert
Beck, A. Cecil Erskine, David C. Hodge, John
Bell, Richard Essex, R. W. Holt, Richard Durning
Bethell, Sir J. H. (Essex, Romford) Esslemont, George Birnie Hope, W. H. S. (Somerset, N.)
Bethell, T. R. (Essex, Maldon) Everett, R. Lacey Hyde, Clarendon G.
Black, Arthur W. Falconer, James Idris, T. H. W.
Boulton, A. C. F. Fenwick, Charles Isaacs, Rufus Daniel
Brace, William Ferens, T. R. Jackson, R. S.
Bright, J. A. Foster, Rt. Hon. Sir Walter Jenkins, J.
Brooke, Stopford Fuller, John Michael F. Johnson, John (Gateshead)
Brunner, Rt. Hon. Sir J. T. (Cheshire) Gibb, James (Harrow) Johnson, W. (Nuneaton)
Bryce, J. Annan Glendinning, R. G. Jones, Sir D. Brynmor (Swansea)
Buckmaster, Stanley O. Goddard, Sir Daniel Ford Jones, William (Carnarvonshire)
Burns, Rt. Hon. John Gooch, George Peabody (Bath) Keating, M.
Burt, Rt. Hon. Thomas Greenwood, G. (Peterborough) Kekewich, Sir George
Byles, William Pollard Grey, Rt. Hon. Sir Edward King, Alfred John (Knutsford)
Cameron, Robert Grove, Archibald Laidlaw, Robert
Causton, Rt. Hon. Richard Knight Gulland, John W. Lamb, Edmund G. (Leominster)
Cawley, Sir Frederick Harcourt, Rt. Hon. L. (Rossendale) Layland-Barratt, Sir Francis
Channing, Sir Francis Allston Harcourt, Robert V. (Montrose) Lever, A. Levy (Essex, Harwich)
Cheetham, John Frederick Harmsworth, Cecil B. (Worcester) Levy, Sir Maurice
Cherry, Rt. Hon. R. R. Hart-Davies, T. Lloyd-George, Rt. Hon. David
Lough, Rt. Hon. Thomas Radford, G. H. Strauss, E. A. (Abingdon)
Luttrell, Hugh Fownes Raphael, Herbert H. Summerbell, T.
Macdonald, J. M. (Falkirk Burghs) Rea, Rt. Hon. Russell (Gloucester) Taylor, John W. (Durham)
McKenna, Rt. Hon. Reginald Rea, Walter Russell (Scarborough) Tennant, H. J. (Berwickshire)
M'Laren, Sir C. B. (Leicester) Rees, J. D. Thomas, Sir A. (Glamorgan, E.)
Marks, G. Croydon (Launceston) Richards, Thomas (W. Monmouth) Tomkinson, James
Marnham, F. J. Richards, T. F. (Wolverhampton, W.) Villiers, Ernest Amherst
Masterman, C. F. G. Richardson, A. Walker, H. De R. (Leicester)
Menzies, Sir Walter Roberts, G. H. (Norwich) Walters, John Tudor
Molteno, Percy Alport Robertson, Sir G. Scott (Bradford) Wason, John Cathcart (Orkney)
Montagu, Hon. E. S. Robinson, S. Waterlow, D. S.
Morgan, G. Hay (Cornwall) Robson, Sir William Snowdon Watt, Henry A.
Morse, L. L. Roch, Walter F. (Pembroke) Weir James Galloway
Morton, Alpheus Cleophas Roe, Sir Thomas White, J. Dundas (Dumbartonshire)
Murray, James (Aberdeen, E.) Rose, Sir Charles Day White, Sir Luke (York, E. R.)
Myer, Horatio Russell, Rt. Hon. T. W. Whitehead, Rowland
Napier, T. B. Rutherford, V. H. (Brentford) Whitley, John Henry (Halifax)
Newnes, F. (Notts, Bassetlaw) Samuel, Rt. Hon. H. L. (Cleveland) Wilkie, Alexander
Norman, Sir Henry Samuel, S. M. (Whitechapel) Williams, J. (Glamorgan)
Nussey, Sir Willans Schwann, C. Duncan (Hyde) Williams, Sir Osmond (Merioneth)
Nuttall, Harry Schwann, Sir C. E. (Manchester) Wills, Arthur Walters
O'Brien, Patrick (Kinkenny) Seely, Colonel Wilson, Hon. G. G. (Hull, W.)
O'Donnell, C. J. (Walworth) Sherwell, Arthur James Wilson, Henry J. (York, W. R.)
O'Kelly, James (Roscommon, N.) Shipman, Dr. John G. Wilson, P. W. (St. Pancras, S.)
Parker, James (Halifax) Simon, John Allsebrook Wilson, W. T. (Westhoughton)
Pearce, William (Limehouse) Soares, Ernest J. Winfrey, R.
Pearson, Sir W. D. (Colchester) Stanley, Hon. A. Lyulph (Cheshire) Wood, T. M' Kinnon
Philipps, Col. Ivor (Southampton) Steadman, W. C. Yoxall, Sir James Henry
Pollard, Dr. G. H. Stewart, Halley (Greenock)
Price, C. E. (Edinburgh, Central) Stewart-Smith, D. (Kendal) TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.
Priestley, Arthur (Grantham) Strachey, Sir Edward

Amendments made: To leave out the words "become due" ["on which increment value becomes due"], and to insert the words, "is to be collected as ascertained in accordance with this Section."

At the end of Sub-section 1, to insert the words, "as ascertained in accordance with the general provisions of this part of this Act as to valuation."—[The Attorney-General.]


moved, after the words last added, to insert the words "and is proved by the Commissioners to be attributable to any public expenditure"

It is obvious that the adoption of an Amendment like this throws the responsibility upon the Commissioners of proving that the rise in value had been caused either by the State or by the municipality—in fact, by something done by the community. The object of the Amendment is to make it quite clear that in getting this duty on increment value the Commissioners have got to make out that the increased value, for the purpose of the duty, is attributable to public expenditure or public works generally. There is no doubt at all that if the public utterances of the President of the Board of Trade or of any other advocates of this Bill, who have taken no part whatever in the discussions in the House, for obvious reasons, but who have of late been so exceedingly prolific of speeches in the country, were to be paid the smallest attention to as giving any guide to the real provisions of the Bill, there ought not to be the slightest difficulty in accepting the Amendment. But I have no hope that the Government will accept the Amendment. I know, from what they have said on previous Amendments, that they intend to see that it is rejected, but I feel myself bound to insist upon moving it, if not in order to correct the obvious shortcomings of the Clause itself, at all events to put the Government to the test of common honesty. If they are honest in what they have been saying in the leading articles which their newspapers have produced and in the speeches which their representatives have made, that all they intend to ask for is a tax upon increment brought about by the public, they will accept the Amendment. But what they intend to get is 20 per cent. of the increased value which has arisen from all kinds of other causes, and the principal cause, as we all know, is the operation of the law of supply and demand. Under these circumstances, what the Government are seeking to do by this Clause, if un-amended, is to take advantage of that increase in the population, that general demand for more land for all sorts of public and other purposes and general amenities, and to get out of the landlords not merely 20 per cent. upon the increase which has arisen while men slept, and the increment which arises from public expenditure and public enterprise generally, but to take out of the owner of the land 20 per cent. upon any increment which arises from any source whatever unless the owner can prove that it arises from his own individual outlay.




I am rather surprised, seeing the acute and vigilant attention which the hon. Member has given to the course of the Debates on this Bill, that he should state with such inaccuracy the object of the Government. He says if the Government are honest in what they have said, i.e., that all they want is a tax on the income arising from public expenditure, they will accept his Amendment. But the Government have not said that is all they want. The Government say if there is an increment arising from a communal demand due to communal necessities they think that is an increment which may fairly be made a subject of taxation, but they have not by any means intimated that they desire to limit the subject-matter of that taxation purely to public expenditure in the sense of expenditure by the State. That is not their object, and I do not think any such intention can be ascribed to them from anything they have said. Then the hon. Member puts upon the Commissioners the onus of proof as to the origin of the increment. That is an impossible task. He puts upon them the burden of showing that it is attributable to public expenditure. That indicates the impossibility of accepting any such limitation of the scope of the tax as the hon. Member suggests. We could not accept it—first, because it is, in our opinion, an improper limitation; and, secondly, because even if it were a limitation that we desire, it is certainly one to which we could not give effect by means of the words which the hon. Member suggests.


I do not know whether it is necessary to divide upon this. I know we are bound to be outvoted. I would only say that the attitude which the Government take up is that a man has got to prove his title twice to his own property. That is really what it comes to. I should have said that if a man has got an indefeasible title to property under the ordinary law, and if the State comes and says that part of the property does not really belong to him but to the State as unearned increment, the onus should be thrown on the State to prove what part he is entitled to. Instead of that, the State asks him to make good his title to his own property. It appears to me that that is a very unsound method of approaching this question and taking the property. My contention is that if there is unearned increment due to the growth of population or to the action of the community, then surely the burden of proving how much of the unearned increment is to be taken by the State should rest on the State. It should not be thrown on the owner to prove how much of his own property belongs to him. That seems to me to invert the ordinary course of law and justice, but if the Government persist in this method, of course, we have no course but to submit.


I do not wish to put the House to the trouble of a division.

Amendment negatived.


I beg to move to insert at the end of Sub-section (1) the words "subject to deduction of the amount of any decrement in the same period in the value of any other land in the same ownership."

I move this Amendment for the reason that the Bill as it stands ignores the fact that while there will be an increase in the market value of some land there will, on the other hand, be a serious decline in the market value of other land. I am reminded of a distinguished man who long before the introduction of the Budget had considerable weight in the counsels of hon. and right hon. Gentlemen who sit on the opposite side of the House. I refer to the late Professor Therold Rodgers. In the Select Committee in 1890 on Town Holdings a question was put to the Professor on these lines: "You do not advocate, do you, the imposition of a tax upon real property on the ground of what is called unearned increment?" He replied, "Oh, no; I do not know what it means." If hon. and right hon. Gentlemen would refer to the proceedings of that Committee with special reference to this particular Clause, they will see that Professor Thorold Rodgers went on to say that if the State is to appropriate part of any unearned increment it might fairly be expected that it ought also to give some compensation in the case of unforeseen decrement. My Amendment does not ask so much as that. It will be content with much less. It only wants the Government to recognise that when the same owner has some land which has increased in value and other land which has decreased in value, he should be allowed to deduct any loss which he sustains on his property from any gain he realises before he is subjected to the special taxation on account of the gain. Instances are constantly happening in this Metropolis to show the fairness of that pro- posal. The diversion of traffic from one particular street to another causes loss or gain. It is common knowledge that increment is changed to serious decrement by this diversion in the traffic. On the principle of right and justice, I do not see how the Government can refuse to allow this Amendment to be carried. It seeks to remedy an obvious injustice. The Government have prided themselves all through in seeking to be just in all their dealings, and not to press hardly on any particular interest. If they allow this Clause to pass into law without remedying this injustice, they will not be acting up to their professions in the Debates which have taken place in the House.


I beg to second the Amendment. I had an Amendment somewhat in this form on the Paper during the Committee stage, but I was not able to move it. In my opinion, unless some such Amendment is included, there will be a heavy blow struck at the building companies around London and other large towns; and not only at the building companies, but at those builders who are engaged in the development of estates. They will find business so unprofitable when they have to pay this tax, in addition to running the risk which they must always run, that unless something of this kind is done they will have to give up the business by means of which they obtain their livelihood. Companies which have estates in different parts of the country may be able to set off the losses in one place against the profits in another, and so be able to make a fair profit. The Attorney-General is aware that one of the largest of these companies is the British Land Company. I believe it had for one of its founders Richard Cobden. That company, which has estates near London, was considered to be doing well, but unless something of the kind proposed in the Amendment is done they will not be able to keep up the very moderate rate of dividend which they have been paying. Their dividend has now come down to something like 3 or 4 per cent., and no one can call that an excessive rate for a business of this kind. If they have to share their profits with the State their chances of future dividends are small. I happen to know a case of a comparatively large building company which has within the last month decided to discontinue its operations. The directors state that since this Budget was brought in they have not succeeded in selling a single plot of land, nor have they had an order for the erection of a house. They have employed up to now a brick-field in which they gave work to about 70 men, and they have closed that brick-field in consequence of the Budget. That company is one of those which will be particularly hit unless such an Amendment as this is passed. I can quote one other case which is familiar to all Members of the House, that of an undertaking which is viewed with great partiality and interest by Members on both sides. I refer to Letchworth, the First Garden City. I believe among the directors of that are represented the two sets of opinion which we represent here. That company has issued a circular which shows with more certainty than any of us could claim, as it comes from gentlemen actually engaged in the business of developing the estate, how they will be affected by these Land Tax proposals. They state in the circular that they have unanimously agreed that the Budget as at present drawn will tax the First Garden City, Limited, and, indeed, many other land developments, very heavily, not on unearned increment but on the results of their own working expenditure. The Budget, it is stated, will tax the company to the extent of about £8,000 during the next five years, making it extremely unlikely that the company can show a profit.

It is difficult to sec how Letchworth or any other garden city can ever pay its way if heavy taxes are to be levied upon what are practically gross earnings. The directors ask the shareholders to urge their representatives in Parliament to support an Amendment to the Finance Bill exempting garden city undertakings from the new taxes. I hope that the directors' words will have some influence with Members who hold their views, and that they will support such Amendments as will help to give them a fair share in the future profits of their undertakings. And when they ask you to exempt garden city undertakings from the new taxes I quite agree that not only garden cities, but any developers of land are equally entitled to be exempted from this tax. We are not now seeking to have them exempted, but rather that they should have the decrement allowed as well as the increment. There is no distinction between builders who are developing an estate and those who are developing it as limited liability companies or garden cities, or under any other such name. Possibly one may think that he is developing estates in a more picturesque manner than the other and giving larger gardens and a better class of houses; but that they are all doing substantially the same work will be allowed by all. I strongly urge the acceptance of this Amendment, which will give some help to these people who are doing good work in the country, and who, if they are crushed out by this tax, will abandon the business, in which case building will largely cease in the suburbs of large cities until a rent is reached which, notwithstanding the Clauses of this Budget, will make it attractive for people to invest their money. It will not do that until rents have gone up considerably. I am sure that is not the wish of the Gentlemen who favour these clauses.


The hon. Member is dealing with the question far too generally. He should confine himself to the Amendment.


I will close with the hope that the Amendment may be accepted.


I am sure that hon. Members will not desire to press this particular Amendment to a Division. This proposal which touches one of the essential portions of the Bill was discussed at great length in a crowded House an incredible number of years ago, and now reappears in a sort of phantom form in a House not particularly crowded, and with but a very condensed and a rightly condensed repetition of the arguments advanced before. I may be allowed to allude to one subject brought up by the hon. Member, though I would say that it was not strictly relevant to the Amendment at all, and that is the question of Letchworth Garden City. We have been in negotiation with promoters of garden cities, but we never had any of them ask for such an Amendment as this, nor did they deal with the question of decrement of the land on which they are engaged. The whole point was to obtain a somewhat larger amount of reduction than was attributable to them. Nor is this Amendment limited to land-developing companies. It applies just as much to private owners. It will give the larger owner a very considerable advantage in comparison with the small owner. It would mean that the big owner could set say a loss in Caithness against a gain in Cornwall which a small owner could not do. It would mean also that the whole principle on which the tax is based would have to be abandoned. That is the principle that wherever there is only an increment the State takes a proportion. The State takes no consideration where there is no increment. For these reasons I hope that the hon. Member will not consider it necessary to divide the House.


The principle on which this tax is established seems to be from the Government point of view "heads I win and tails you lose." If they can show a profit Anywhere they can come down on them. Take the case of a builder who buys five acres for development. If he has a quarter of an acre on some corner of that piece of land in separate occupation, and you can show that he has made a profit which is not directly attributable to his exertions, by a rise in the price of land, you swoop down upon him and take that profit. But, on the whole of his operations he may have made a loss, yet you do not take account of that. The essential point is that you are putting a tax upon what is not a pure profit at all. You might just as well say in the case of farming operations that you are going to take the profit whenever a particular piece of land is profitable, but you are not to take account of the whole of the operations of the farm. The one substantial point made against the Amendment is of setting Caithness against Cornwall. I admit that; but I would suggest that that could be met by putting in some words, such as "subject to deduction of the amount of any decrement in the same period in the value of any other contingent or adjacent land in the same ownership." If the Government accept that they would have made a considerable concession, and you would have a tax that was to operate on the whole of the one plot of land, and that would be fair, because it may very well happen that a small portion of the land may satisfy the market conditions of the moment, and that the rest of the land has to wait many years before it can be parted with. During that time the landowner has to stay out of his interest. But if those words are added you would get the one unit—the fair, natural unit—where any profit was made. But under the Bill as it stands you tax on a profit which is perfectly fictitious and never made at all.


I would like to put this case to the Attorney-General. This is a point which presses very much upon the public mind. There is no doubt whatever that it does appeal to the public mind as an injustice that the duty shall be claimed upon increment when there is really no increment. This particular case Appears to me to embody the greatest amount of hardship, and I should like the Attorney-General to tell us whether this is what will really happen: A man buys a piece of building land, a certain number of acres. He pays £10,000 for it. Five years afterwards he dies. Increment Duty is to be collected on any increment which has accrued to that property. The land is divided into 20 parts. Three or four of those plots have increased in value, and are valued at a higher figure than at the time the property was purchased. Remember, there is a separate value on every Separate occupation, and therefore those plots have been separately valued and have been purchased subject to that existing valuation. I am speaking as if the Bill had become an Act, and was in operation. But, on the death of the owner, other plots of his estate have diminished in value. The total value of the property was £10,000 at the time of purchase, and at the man's death it was £9,000. On some portions there had been an increase of value, and on others a decrease. Is it really the intention of the Government, when a man has paid £10,000 for an estate which is only worth £9,000 at the time of his death, that Increment Duty is to be paid on those parts that have appreciated in value without any regard to the other parts which have depreciated? I want a straight answer to that question, Which is one exercising very largely the public mind, and it will greatly relieve people if we are given to understand that in such a case as I have mentioned the tax shall not be payable, though under the Bill I think the tax will have to be paid. I want the Attorney-General to say whether or not the tax will be payable in the circumstances I have described.


I do not think I can add anything to what has already been said, and so often said, on the subject-matter of this Amendment. The hon. and gallant Gentleman puts a hard case—that of an owner of property, parts of which have depreciated in value, while other portions have appreciated. He said, "Can it be that the Government intend, or is it the effect of the Bill, that the property-should pay Increment Duty and receive no compensation in account?" I suppose what the hon. and gallant Gentleman suggests is that there should be some sort of Compensation in account before the tax is collected. The hon. and gallant Member said that decrement should be in some way set off against increment. We have stated that this is not by any means our intention. We collect the Increment Duty where it occurs, and we ignore the decrement where that also occurs. It may be a hardship which the hon. and gallant Gentleman may say is involved in the nature of the tax. However, you have got the fact, and the hon. and gallant Gentleman will not find, I think, that the Government have shirked, or are likely to shirk, the proposition that an owner may have property divided into different plots, some of which may show increment while others may have diminished in value. It is quite true that the tax is on the unearned increment, without any reference to decrement, and I think my answer, if not satisfactory to the hon. and gallant Gentleman, is sufficiently clear.


The Attorney-General's answer is perfectly clear, and give my hon. and gallant Friend all he wishes. What is it that the hon. and learned Gentleman says the Government intend to do? A man enters upon a speculation and buys certain land. He divides it into plots. It is assessed according to the number of occupations, which may be according to the whim of the previous possessor or according to the requirements of the Commissioners, who have a discretion to assess land as they please. It is not at the discretion of the purchaser; it is broken up into plots at the discretion of somebody else. The purchaser buys the property for the purpose of developing it, and he develops it as fast as he can. Before he has finished, as my hon. and gallant Friend suggested, he dies, and therefore the payment of Increment Duty becomes due. Then the Government, wherever they find that the value; of a particular plot is greater than it was at the time of purchase, say, "Here is unearned increment; we take a percentage of it." I leave on one side the question of deductions, which are not affected one way or the other by the proposition we are now taking. I am bound to say that, in order that I may not represent the Government as taking a toll on increment which is proved to be directly due to the expenditure of the man himself. For the sake of my argument, I leave that on one side, because it only complicates the matter. Subject to that condition, wherever the Government finds any particular plot has an increased value not produced in that particular way, they say: "Here is a windfall, here is unearned increment, on which we take our 20 per cent." The development of land in this way is a business like any other business, and no business man could afford to treat his account or speculations as the Government are going to treat the land in regard to increment value. The business man cannot look at the profits he makes on one corner of his land without regard to other parts of his land. He has to set off the losses on one part against the profits on another—a good transaction here against a bad transaction there. That is the way in which a man must keep his accounts, unless he is to go into the Bankruptcy Court. But for the purpose of taxation the Government will not allow him to set off an unfortunate transaction against a good transaction. Wherever he has done well they say that is unearned increment, and they take a fifth.

Wherever it is a loss, they say: "We do not care one halfpenny how that loss came about; we do not care whether it is avoidable or not avoidable; you cannot set that against the gain." But it does not rest there. The portion gained on the one part may be due to a cause which in itself is a reason for the loss on another. Let me take such a case as this: Local authorities have from time to time to provide burial grounds. They serve notice and proceed to acquire land compulsorily, with the consent of the Local Government Board, for the purposes of a cemetery. Suppose they pick out land which is suitable, the Local Government Board approving, and they take a portion of an estate in that way. A higher ground value would be paid for it because it reduces the value of the surrounding land. People do not care to live where funerals are constantly passing under their eyes. The portion of land sold for a cemetery obtains a higher price because the other land henceforth would fetch a lower price, and because, in selling the portion of land for that particular purpose the value of the other land is reduced. Then the Government will come in and say, "Oh, no; the whole of that is unearned increment or windfall, of which we take one-fifth, and we refuse to look at the effect of the transaction upon your property as a whole." There is the same kind of case if you sell land for a factory. It may or may not be the case, it depends on individual circumstances; but undoubtedly in some cases the erection of a factory will diminish, while producing an apparent greater increment in value, and depreciate the value of the land not taken by the factory. Take the case of gasworks or any trade of a noxious character. Of course, you ask a higher price if they want to plant those in the middle of an estate which you are developing or may develop, because they injure the prospects of the rest of the property. Surely it would only be just that the injury done should be allowed for. I have heard the Attorney-General in a remark to an hon. Member behind him give an answer which he made in the Committee stage, but which I rather think he thought better of since then. He says he is compensated for that in price. That is only repeating in a sentence what I have been elaborating at much greater length. He charges, in the price which he takes from the gas works or sanitary company, or local authority, the depreciation which takes place in the rest of the property. Yes, but what he gets from the gas works or local authority or sanitary company is not all unearned increment. It is compensation for the depreciation of his other property, and yet you charge on it as if it were unearned increment, and you insist it shall be so treated for the purpose of taxation. I quite agree with the Attorney-General he does charge for that depreciation. That is what makes the price. You make that to be unearned increment, but, of course, it is not unearned increment. You may treat it as unearned increment for the purpose of taxation, but it is only one of the many points which show, as my right hon. Friend said earlier, to have introduced the adjective unearned in the first lines of the Bill, if it were not followed by a series of Amendments throughout the Bill, would only have been putting in the front of the Bill an expression which was not true. It is not in the Bill but in the speeches of the Government supporters all over the country, that all they are taxing is the unearned increment and the windfall. Here is one of the many cases which we have brought before them in which you are not taxing a windfall, but in which, by the admission of the Attorney-General, you are taxing the compensation which a man gets for the depreciation of the rest of his property, and yet with that knowledge in his own mind, and so clearly in his own mind that he uses it as an answer to me the Attorney-General refuses to give any relief. My hon. and gallant Friend (Mr. Pretyman) said that the country was a good deal interested in this matter and would be anxious to know the Attorney- General's answer. I think my hon. and gallant Friend should find some satisfaction in giving that answer the widest circulation in the country that he can.


It seems to me that unnecessary elaboration has got into the simple question which has arisen. He (Mr. Pretyman) puts the question that a man buys a plot of land for a thousand pounds and divides it into four plots. Two of those plots rise in value and two sink in value, or they do not rise in value, and the whole would not realise more than the thousand pounds even though the two lots have risen considerably. I think that is a fair representation of the proposition put by the hon. Member. He asks the question: Do the Government mean to take into account the rise in value of the two plots and to claim on that alone? How are you going to show that they have risen in value? For the reason because each of them is a fourth and you only gave £250 for each. The answer of the man would be, "No, you cannot do that; you cannot divide the price; you must take the whole as it was. I gave a thousand pounds for the whole, and you must charge me increment on the fact that I gave a thousand pounds." I think that is precisely what would happen in the course of the valuation, and it seems to me no sensible man would take its value in inches. If it bore the construction that you could go behind the bargain and say to the man who gave a thousand pounds, "You gave so much per yard or per rood," then injustice might arise. I am aware Clause 29 says you may assess in respect of any piece of land, whether under separate occupation or not, but that does not seem to affect the question. When you come to look at the increment you must see the real bargain the man made when he bought the land and nothing else. If it were otherwise, I could quite understand the elaborate stucture of objections which the right hon. Gentleman the Member for East Worcestershire (Mr. Austen Chamber-Iain) has built up upon it. [An HON. MEMBER: "It is not so in the Bill."] Nobody would take the gasworks alone; they would take the whole; they would see what you gave for the whole of it, and include the piece of land gone waste.


May I make the point clear? The point was not exactly as the hon. Member stated it, where the owner had subsequently divided the land. My point was that the man buys a piece of land which is already divided into small, separate holdings, and each of which is separately valued. It is all one property, but each of those occupations is separately valued, and becomes a separate unit of valuation, and is separately taxed. One of those plots or units of valuation is sold for a gasworks, and thereby depreciates enormously the two adjoining plots, and the price, as my right hon. Friend says, is largely due to that depreciation. The whole of that increment will be charged with duty, while the depreciation of the others will not be taken into account, and if the whole of the property at the man's death is worth a thousand pounds less than what he gave for it increment value will be charged on the whole of the price which he obtained for the gasworks, and no allowance will be made for the depreciation.


That will serve my purpose as well. Suppose a man is the owner of four plots. Unless he is an absolutely foolish individual, he will not put works upon one part of it which will depreciate the rest of the property. If you imagine such a state of things as that you can make out that the Bill will work out unfairly or whimsically, but in that case it would be the man's own doing, and it would not be a reasonable development of the property.


It is a remarkable fact that, although we have had six months' discussion, the Government and their supporters do not yet understand the scope of the Bill. The separate occupations are in the Bill. The case put by my right hon. Friend (Mr. A. Chamberlain) was where a part of a plot is used by the owner or his friends for some industrial purpose. Perhaps the owner sets us a useful new industry by his own enterprise, and thereby raises the value of that part of the ground. That is not the action of the community, it is the action of the individual. The community perhaps starts a destructor—an obvious nuisance—on another part of the ground, and thereby lowers the value of that part. The Government, which professes to be a fair, logical, and honest Government, actually proposes to charge that man for the increase due directly or indirectly to his own foresight and industry, while they allow nothing whatever for the depreciation due directly to the action of the community. Could anything be more grotesque? The country has only to understand this proposal to reject it and its authors.


If you deal with particular plots and particular occupations, I do not see how you can help what is now being discussed. If certain plots go up in value, you must pay; but if some plots go down, you cannot reckon them against the others. Each plot must be dealt with according to its merits. I had some land in the neighbourhood of a Canadian town. Some plots went up, and others down. On those that went up I naturally had to pay

taxation, but I could not claim any rebate in respect of the plots which went down, even though they were adjacent to the others. I do not see how by any possibility you can set one plot against another. It would introduce endless complication, and really defeat the whole purport of the Bill.

Question put, "That the proposed words be there inserted."

The House divided: Ayes, 54; Noes, 184.

Division No. 811.] AYES. [9.0 p.m.
Acland-Hood, Rt. Hon. Sir Alex. F. Forster, Henry William Pretyman, E. G.
Ashley, W. W. Foster, P. S. Randles, Sir John Scurrah
Balcarres, Lord Gardner, Ernest Ratcliff, Major R. F.
Baldwin, Stanley Gordon, J. Rawlinson, John Frederick Peel
Baring, Capt. Hon. G. (Winchester) Gretton, John Renwick, George
Carlile, E. Hildred Haddock, George B. Roberts, S. (Sheffield, Ecclesall)
Castlereagh, Viscount Hamilton, Marquess of Rutherford, Watson (Liverpool)
Cave, George Hardy, Laurence (Kent, Ashford) Salter, Arthur Clavell
Chamberlain, Rt. Hon. J. A. (Worc'r.) Hill, Sir Clement Smith, Abel H. (Hertford, E.)
Clark, George Smith Hills, J. W. Stanier, Beville
Cochrane, Hon. Thomas H. A. E. Hope, James Fitzalan (Sheffield) Talbot, Lord E. (Chichester)
Courthope, G. Loyd Kimber, Sir Henry Valentia, Viscount
Craig, Captain James (Down, E.) King, Sir Henry Seymour (Hull) Walker, Col. W. H. (Lancashire)
Davies, David (Montgomery Co.) Lowe, Sir Francis William Walrond, Hon. Lionel
Doughty, Sir George Magnus, Sir Philip Williams, Col. R. (Dorset, W.)
Douglas, Rt. Hon. A. Akers- Moore, William Younger, George
Faber, George Denison (York) Morpeth, Viscount
Faber, Capt. W. V. (Hants, W.) Nicholson, Wm. G. (Petersfield) TELLERS FOR THE AYES.—Mr. Fell and Mr. R. Duncan.
Fletcher, J. S. Parkes, Ebenezer
Abraham, W. (Cork, N. E.) Dalziel, Sir James Henry Jackson, R. S.
Alden, Percy Davies, M. Vaughan-(Cardigan) Jenkins, J.
Allen, A. Acland (Christchurch) Dewar, Arthur (Edinburgh, S.) Johnson, John (Gateshead)
Allen, Charles P. (Stroud) Duckworth, Sir James Jones, Sir D. Brynmor (Swansea)
Armitage, R. Essex, R. W. Jones, William (Carnarvonshire)
Atherley-Jones, L. Esslemont, George Birnie Kekewich, Sir George
Baker, Sir John (Portsmouth) Everett, R. Lacey King, Alfred John (Knutsford)
Balfour, Robert (Lanark) Fenwick, Charles Laidlaw, Robert
Barlow, Sir John E. (Somerset) Ferens, T. R. Lamb, Edmund G. (Leominster)
Barnes, G. N. Foster, Rt. Hon. Sir Walter Layland-Barratt, Sir Francis
Barry, Redmond J. (Tyrone, N.) Fuller, John Michael F. Lever, A. Levy (Essex, Harwick)
Beale, W. P. Gibb, James (Harrow) Levy, Sir Maurice
Beauchamp, E. Glendinning, R. G. Lewis, John Herbert
Beck, A. Cecil Goddard, Sir Daniel Ford Lloyd-George, Rt. Hon. David
Bell, Richard Gooch, George Peabody (Bath) Luttrell, Hugh Fownes
Belloc, Hilaire Joseph Peter R. Greenwood, G. (Peterborough) Macdonald, J. M. (Falkirk Burghs)
Bethell, Sir J. H. (Essex, Romford) Grove, Archibald Macnamara, Dr. Thomas J.
Bethell, T. R. (Essex, Maldon) Gulland, John W. M' Laren, Sir C. B. (Leicester)
Black, Arthur W. Harcourt, Rt. Hon. L. (Rossendale) Marks, G. Croydon (Launceston)
Boulton, A. C. F. Harcourt, Robert V. (Montrose) Marnham, F. J.
Brace, William Harmsworth, Cecil B. (Worcester) Masterman, C. F. G.
Bright, J. A. Hart-Davies, T. Menzles, Sir Walter
Brooke Stopford Harvey, A. G. C. (Rochdale) Montagu, Hon. E. S.
Brunner, Rt. Hon. Sir J. T. (Cheshire) Harvey, W. E. (Derbyshire, N. E.) Morgan, G. Hay (Cornwall)
Bryce, J. Annan Haslam, James (Derbyshire) Morse, L. L.
Burns, Rt. Hon. John Haslam, Lewis (Monmouth) Morton, Alpheus Cleophas
Burt, Rt. Hon. Thomas Haworth, Arthur A. Myer, Horatio
Byles, William Pollard Hazel, Dr. A. E. W. Napier, T. B.
Cameron, Robert Hazleton, Richard Newnes, F. (Notts, Bassetlaw)
Causton, Rt. Hon. Richard Knight Hedges, A. Paget Nolan, Joseph
Cawley, Sir Frederick Helme, Norval Watson Norman, Sir Henry
Cheetham, John Frederick Henry, Charles S. Nussey, Sir Willans
Cherry, Rt. Hon. R. R. Herbert, Col. Sir Ivor (Mon., S.) Nuttall, Harry
Cleland, J. W. Herbert, T. Arnold (Wycombe) O'Brien, Patrick (Kilkenny)
Clough, William Higham, John Sharp O'Connor, John (Kildare, N.)
Collins, Sir Wm. J. (St. Pancras, W.) Hobart, Sir Robert O'Donnell, C. J. (Walworth)
Corbett, A. Cameron (Glasgow) Hodge, John O'Grady, J.
Corbett, C. H. (Sussex, E. Grinstead) Holland, Sir William Henry O'Kelly, James (Roscommon, H.)
Cotton, Sir H. J. S. Holt, Richard Durning Parker, James (Halifax)
Craig, Herbert J. (Tynemouth) Hope, W. H. B. (Somerset, N) Pearce, William (Limehouse)
Crossley, William J. Hyde, Clarendon G. Pearson, Sir W. D. (Colchester)
Curran, Peter Francis Idris, T. H. W. Philipps, Col. Ivor (Southampton)
Pollard, Dr. G. H. Samuel, Rt. Hon. H. L. (Cleveland) White, J. Dundas (Dumbartonshire)
Price, C. E. (Edinburgh, Central) Samuel, S. M. (Whitechapel) White, Sir Luke (York, E. R.)
Priestley, Arthur (Grantham) Schwann, C. Duncan (Hyde) Whitehead, Rowland
Radford, G. H. Schwann, Sir C. E. (Manchester) Whitley, John Henry (Halifax)
Raphael, Herbert H. Seely, Colonel Wilkie, Alexander
Rea, Rt. Hon. Russell (Gloucester) Shipman, Dr. John G. Williams, J. (Glamorgan)
Rea, Walter Russell (Scarborough) Soares, Ernest J. Williams. Sir Osmond (Merioneth)
Rees, J. D. Stanley, Hon. A. Lyulph (Cheshire) Wills, Arthur Walters
Richards, Thomas (W. Monmouth) Steadman, W. C. Wilson, Hon. G. G. (Hull, W.)
Richards, T. F. (Wolverhampton, W.) Stewart-Smith, D. (Kendal) Wilson, Henry J. (York, W.R.)
Richardson, A. Strachey, Sir Edward Wilson, J. W. (Worcestershire, N.)
Ridsdale, E. A. Strauss, E. A. (Abingdon) Wilson, P. W. (St. Pancras, S.)
Roberts, G. H. (Norwich) Summerbell, T. Wilson, W. T. (Westhoughton)
Robertson, Sir G. Scott (Bradford) Taylor, John W. (Durham) Winfrey, R.
Robinson, S. Thomas, Sir A. (Glamorgan, E.) Wood, T. M' Kinnon
Robson, Sir William Snowdon Thomas, David Alfred (Merthyr) Yoxall, Sir James Henry
Roch, Walter F. (Pembroke) Trevelyan, Charles Philips
Roe, Sir Thomas Walker, H. De R. (Leicester)
Rose, Sir Charles Day Wason, John Cathcart (Orkney) TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.
Russell, Rt. Hon. T. W. Waterlow, D. S.
Rutherford, V. H. (Brentford) Weir, James Galloway
Mr. WATSON RUTHERFORD (for Mr. James Mason)

moved, at the end of Subsection (1) to insert the words, "subject to deduction of such a sum as will recompense the owner for loss of income with compound interest at 4 per cent. thereon for the period or periods during which he is unable to sell or let the land for such consideration as in view of the character and surroundings of the neghbourhood would have been reasonable."

I think, perhaps, this is as good a place as any in which to raise this important question. I think the Government will agree that upon the Report stage this important question of interest should at all events be raised and dealt with. The Amendment is designed to deal with the ordinary case of the development of land for building purposes. I take it that this is a most important question—in which Increment Value Duty requires to be considered—because of the great public land of the country, agricultural land is already in a good many respects provided for, for this duty is not to be compelled. With regard to property that is fully developed in urban districts, with houses built upon it, we all know to our cost who have been at all interested in house property erected in the suburbs of a city that it has a tendency not to go up in value, but as years go on to decline. Therefore I am one of those that consider that this Increment Duty will primarily fall, for the greater portion of its yield, upon those belts of country which surround most of our large cities, including, of course, London, and which are in the neighbourhood of mineral and other developments, and newly made places of that sort. It is there, then, where land is changing from agricultural usages to building value, and under those circumstances, that this incre- ment is looked for. It is a fact to-day that the private owner does not as a rule develop his own land. Those whom I have known that have embarked upon that exceedingly dangerous business have almost invariably lost their money. Developing the land and laying it out for building, which is so essential for the growth of every large town, has become a business, and that business is carried on to-day by people who understand it, and who have experience in it, and who make money as a rule because they understand the business, and because they carry it out on businesslike lines. I venture to think that that business has become so general, and is carried on now in almost every place where there is development of land for building purposes, that, under present I conditions, it has practically become the only reasonable and proper way for unbuilt upon and undeveloped land to become part of a built-up city or an urban district. Under these circumstances we have got to look at the position of the people who are engaged in the business. We ought not to do anything to penalise them. We ought not, even to raise temporary revenue, or, as the right hon. Gentleman now and then takes the opportunity of reminding us, for the purposes of "Dreadnoughts," old age pensions, and so on, to inflict a gross injustice on a certain class of people. If we do, if we make this business of developing land commercially impossible, which I am afraid lest this Amendment or something of the kind is adopted may happen, two immediately important consequences will ensue. The first, and one greatly to be deprecated, is that bricklayers, joiners, slaters, plasterers, and the whole of the building trade are damaged in their employment. Perhaps that most sensitive of all trades—the build- ing trade—will, if it gets a blow of that sort—react upon other employment, and the total amount of unemployment that results will be very disheartening to those who have the interests of the working-classes at heart. A second consequence, and even perhaps, in the long run, a more important consequence, is this: that our cities and towns which are dependent to-day for the relief of their centres which are overcrowded upon the operations of these firms and companies—that those centres will continue to suffer from that overcrowding which is so bad for the morals and the general welfare of those urban districts. I propose to show in a very few words how the absence of allowing for this question of interest will do this injustice. I will put the most ordinary case which suggests itself to my mind. I am aware that this point has on several occasions been referred to in Committee, but, of course, that does not prevent it from being raised now. I perhaps may be excused for raising it, for this reason: that personally I consider this to be the greatest blot, if left, upon these Land Clauses. Let us take the most simple case, in order that the facts may be brought home to the minds of anybody who will take the trouble to look at the figures. Suppose a land company gives £10,000 for an estate in order to lay it out for building.

Supposing that the building company proceeds to spend £5,000 upon laying out the estate, upon levelling the sites, upon making roads, and upon making sewers, and many things besides that require to be done or partially made before the building takes place. The experience of people connected with these things is this. That upon the average it takes in the majority of cases from five to six years to work an estate round and to sell it out in building plots. That means that a man or a company having paid £10,000 for a property on the average have to wait five years before getting back anything on their money. If the interest is 4 per cent. that will mean 20 per cent., and they have had to spend £5,000 upon the property; and if you take 4 per cent. of that for two years you get the total amount that that property represents in the firm's books. I contend you have got to look at this subject exactly in the same way as any business man would look at it and would treat it in his books. If a business man spent £10,000 in buying a property he carries the £10,000 over at the end of the year against the property with interest on it. In the next year there is an amount spent on developing the property, and that expenditure on that he duly enters in his books against the property. There was £10,000 for the property, £5,000 spent upon development, and £3,000 to be added at the end of the five years for loss of income, making £18,000 in all which the company have got to get back before it comes by its own. How does the Bill stand with regard to that? The Bill would treat the £5,000 spent on development as money laid out, and every penny realised over the £15,000 would be treated as increment. Supposing the property sold for £20,000, the State would step in and say there is £5,000 increment, and of that we must secure £1,000. But is that the real state of affairs? The real state of affairs is that £18,000, without having regard to law costs and surveyors' fees, and things of that kind, which would amount to another £1,000, would have been spent upon the property, and that instead of there being a supposed £5,000 increment of profit, the company would be only making £1,000, which is the exact sum which the State has taken away.

In moving this Amendment I am not moving anything of a technical kind dealing with an imaginary grievance. I am putting before the House for the last time this Amendment with the object of securing that people who develop land shall be allowed to treat their accounts in a businesslike way, and shall have only to pay taxes upon real profit. These people do not make any real profit at all until interest is allowed upon capital expenditure. I shall perhaps be told that there is the income from the land; but this is just the occasion where there is no income from the land. The agricultural tenants have been got rid of, the land has been levelled, sewers have been made, sometimes cut down to great depths and driven through rock before they have been certified by the local authority and before a single house has been allowed to be built. All this outlay has taken place, and interest upon it ought, as a matter of business, to be allowed. This is all we ask by this Amendment. If this is not the most convenient place to allow this to be put into the Bill, I shall be quite content, if the right hon. Gentleman will be only willing to admit the principle, to immediately withdraw this Amendment and move it in any other place which the Government think fit; but I do contend, on behalf of the whole building fraternity and of the men whose livelihoods are depending upon the building trade, that this question of interest is the most important and vital one, and goes to the whole question of there being any increment at all. If provision is not made for this, and if once more the Government turn their back upon it and decline to consider anything in the shape of the principle for which I am contending, they will have left a blot from a practical point of view which no amount of regulations or anything of that sort afterwards can possibly enable them to meet. I do assure the House, putting aside all questions of politics, all questions of being for or against these taxes, either in principle or otherwise, that from the practical point of view, if the Government reject the chance of allowing for this interest, they will be doing this Bill irreparable injury and making it unworkable and unjust, and they will be bound themselves next year or the year after, if the Bill passes into law, to come back to Parliament to try to do something to remedy a state of affairs which they will have brought about, not in ignorance, because their attention has been frequently called to it on several occasions, but by their neglect and indifference.


seconded the Amendment.


As the hon. and learned Gentleman has already informed the House, this proposition, or rather the principle involved in it, was frequently discussed during the Committee stage. I am not complaining that the hon. Member thought it necessary to make a final protest on behalf of this principle. There is, however, one difference between this and any Amendment moved in Committee, and it is a difference which I think is rather to the detriment of this Amendment. I am not prepared to adopt the very remarkable principle laid down by hon. Members opposite that the Commissioners are to decide what value the consideration is to be, in view of the character of the surroundings of the neighbourhood, which it would be reasonable for the owner to accept. That introduces a very important element and a very important principle, and I confess I am very surprised that it should have been introduced upon the initiation of the Noble Lord sitting opposite. The hon. and learned Gentleman seems to forget that we did meet the case of the interest by an allowance of 10 per cent. I agree that perhaps 10 per cent. is too rigid in its interpretation, and that in some cases it may be too large, and in other cases too small, an allowance, but on the whole I think it will work out fairly. If interest is allowed it is rather a premium on the person who holds up the land, whereas when you give a uniform allowance of 10 per cent. I think in the majority of cases you cover those instances where a man buys land and gets rid of it at the earliest possible moment. Men engaged in that kind of business do not hold up the land such a number of years as to make the interest run to more than the allowance provided for in the Bill, and for that reason I think by the provision already made in the Bill we have quite adequately met the justice of the case. I agree that 10 percent. is not merely intended to cover the interest, but is supposed to cover other charges as well; but there will be an ample margin left for interest. I do not think the Government can give any other answer than the one which I have already given.


It is quite true that we discussed this matter in Committee, but I think it is one of quite sufficient importance to justify my hon. and learned Friend in raising it. It is a fact that it has been raised in a different form to that in which it was presented in Committee. There is a great deal to be said to the objection to the new form, but the Chancellor of the Exchequer must not be too hard upon us in this matter. We tried this Amendment in a form which was not open to the objection which he has just taken to it. We do not feel greatly distressed when the Chancellor of the Exchequer rebukes us in this way. Coming to the more solid point, what has the Chancellor of the Exchequer got to say for making no allowance for loss of interest and loss of revenue? His answer is that it is not true to say he makes no allowance, because he says he gives 10 per cent. That is true, but the 10 per cent. has to cover a great many things besides interest. It is a single 10 per cent. on the original valuation deducted from the increment before the Increment Duty is charged. Supposing the valuation you start with is £10,000 and you sell for £20,000. In that case you charge increment on £9,000 instead of £10,000, because you allow 10 per cent. on the last valuation. Therefore, it has to cover a great many other things beside interest. The right hon. Gentleman thinks that is generous. Let us take for a moment the case put by my hon. Friend, which was one of a very practical character. In that case it would only cover about half of the cost. The Chancellor of the Exchequer admits that 10 per cent. is too rigid, and he says it is perfectly true that in some cases 10 per cent. may be too much, whilst in others it may be too little, but he argues from that that on the whole justice will be done. That is a poor consolation to the individuals who have to pay too much, and that is not quite the way in which we ought to arrange our taxes.

I rather wonder that the Chancellor of the Exchequer did not feel it necessary to justify himself by any reference to foreign precedents. Up to a certain stage hon. Members will remember we were constantly referred to foreign precedents by the Chancellor of the Exchequer, and particularly to the case of Frankfort, as a model for this tax. Why did the Chancellor of the Exchequer not say a few words about Frankfort to-night? Simply because the White Paper he published in the course of the discussion puts Frankfort out of court altogether. Since the right hon. Gentleman laid upon the Table of the House the paper which showed what the Frankfort tax was, it has never been thought worth while to refer to Frankfort. As a matter of fact, Frankfort allows interest at the rate of 4 per cent. Is it really fair or true to say that when a man invests money in land with a view to developing it, and has to lie out of his money for a certain time while that land

is being developed before he can dispose of it, you should count as unearned increment everything he receives in excess of the price he paid for the land without regard to the time his land has been lying idle or the interest he has lost? It is obvious that here again you are taxing as unearned increment something which is not unearned increment at all, but is really the man's due, counted on by him, expected by him, and without which he would not have gone into this business any more than men will go into any other, business without any hope of profit. I am not wedded to the particular form of the Amendment as it now stands on the Paper, but that form is given to it merely to placate the Chancellor of the Exchequer, and, if he will take it in any other form, and give an allowance for interest specifically as such, I do not care in what form of words he puts it. I know he will not, because in Committee he gave a much better answer to this Amendment than that which he has offered to the House to-night. He then gave an answer which from the point of view of himself and hon. Gentlemen who support him was really conclusive. He said it was perhaps sufficient to say that, if he allowed anything for interest he would get nothing by his tax. I think that is possibly a slight exaggeration, but there is a great deal of truth in it, and it shows how very unjust the tax is.

Question put. "That those words be there inserted."

The House divided: Ayes, 66; Noes, 189.

Division No. 812.] AYES. [9.40 p.m.
Acland-Hood, Rt. Hon. Sir Alex. F. Foster, P. S. Pretyman, E. G.
Balcarres, Lord Gardner, Ernest Randles, Sir John Scurrah
Baldwin, Stanley Gibbs, G. A. (Bristol, West) Ratcliff, Major R. F.
Banbury, Sir Frederick George Gordon, J. Rawlinson, John Frederick Peel
Baring, Capt. Hon. G. (Winchester) Gretton, John Renwick, George
Bignold, Sir Arthur Guinness, Hon. W. E. (B. S. Edmunds) Ridsdale, E. A.
Carlile, E. Hildred Haddock, George B. Roberts, S. (Sheffield, Ecclesall)
Cave, George Hamilton, Marquess of Rutherford, Watson (Liverpool)
Cecil, Evelyn (Aston Manor) Hardy, Laurence (Kent, Ashford) Salter, Arthur Clavell
Chamberlain, Rt. Hon. J. A. (Worc'r.) Hermon-Hodge, Sir Robert Smith, Abel H. (Hertford, E.)
Clark, George Smith Hill, Sir Clement Smith, Hon. W. F. D. (Strand)
Cochrane, Hon. Thomas H. A. E. Hills, J. W. Stanier, Beville
Courthope, G. Loyd Hunt, Rowland Staveley-Hill, Henry (Staffordshire).
Craig, Capt. James (Down, E.) Kimber, Sir Henry Talbot, Lord E. (Chichester)
Craik, Sir Henry King, Sir Henry Seymour (Hull) Thornton, Percy M.
Doughty, Sir George Lowe, Sir Francis William Valentia, Viscount
Douglas, Rt. Hon. A. Akers- M' Arthur, Charles Walker, Col. W. H. (Lancashire)
Duncan, Robert (Lanark, Govan) Magnus, Sir Philip Walrond, Hon. Lionel
Faber, George Denison (York) Moore, William Williams, Col. R. (Dorset, W.)
Faber, Capt. W. V. (Hants, W.) Morpeth, Viscount Younger, George
Fell, Arthur Nicholson, William G. (Petersfield)
Fletcher, J. S. Oddy, John James TELLERS FOR THE AYES.—Mr. James Hope and Viscount Castlereagh.
Forster, Henry William Parkes, Ebenezer
Alden, Percy Harvey, W. E. (Deryshire, N. E.) Pickersgill, Edward Hare
Allen, A. Acland (Christchurch) Haslam, James (Derbyshire) Pollard, Dr. G. H.
Allen, Charles P. (Stroud) Haslam, Lewis (Monmouth) Price, C. E. (Edinburgh, Central)
Armitage, R. Haworth, Arthur A. Priestley, Arthur (Grantham)
Astbury, John Meir Hazel, Dr. A. E. W. Radford, G. H.
Atherley-Jones, L. Hazleton, Richard Raphael, Herbert H.
Balfour, Robert (Lanark) Hedges, A. Paget Rea, Rt. Hon. Russell (Gloucester)
Baring, Godfrey (Isle of Wight) Helme, Norval Watson Rea, Walter Russell (Scarborough)
Barker, Sir John Henry, Charles S. Rees, J. D.
Barlow, Sir John E. (Somerset) Herbert, Col. Sir Ivor (Mon. S.) Richards, Thomas (West Monmouth)
Barnes, G. N. Herbert, T. Arnold (Wycombe) Richards, T. F. (Wolverhampton, W.)
Barry, Redmond J. (Tyrone, N.) Higham, John Sharp Richardson, A.
Beale, W. P. Hobart, Sir Robert Roberts, G. H. (Norwich)
Beauchamp, E. Hodge, John Roberts, Sir J. H. (Denbighs)
Beck, A. Cecil Holt, Richard Durning Robertson, Sir G. Scott (Bradford)
Bell, Richard Hope, W. H. B. (Somerset, N.) Robinson, S.
Bethell, Sir J. H. (Essex, Romford) Hyde, Clarendon G. Robson, Sir William Snowdon
Bethell, T. R. (Essex, Maldon) Idris, T. H. W. Roch, Walter F. (Pembroke)
Black, Arthur W. Isaacs, Rufus Daniel Roe, Sir Thomas
Boulton, A. C. F. Jackson, R. S. Rose, Sir Charles Day
Brace, William Jenkins, J. Russell, Rt. Hon. T. W.
Bright, J. A. Johnson, John (Gateshead) Rutherford, V. H. (Brentford)
Brooke, Stopford Jones, Sir D. Brynmor (Swansea) Samuel, Rt. Hon. H. L. (Cleveland)
Brunner, Rt. Hon. Sir J. T. (Cheshire) Jones, William (Carnarvonshire) Samuel, S. M. (Whitechapel)
Bryce, J. Annan Kekewich, Sir George Schwann, C. Duncan (Hyde)
Burns, Rt. Hon. John Laidlaw, Robert Schwann, Sir C. E. (Manchester)
Burt, Rt. Hon. Thomas Lamb, Edmund G. (Leominster) Seely, Colonel
Byles, William Pollard Layland-Barratt, Sir Francis Sherwell, Arthur James
Cameron, Robert Lever, A. Levy (Essex, Harwich) Shipman, Dr John G.
Causton, Rt. Hon. Richard Knight Lever, W. H. (Cheshire, Wirral) Soares, Ernest J.
Cawley, Sir Frederick Levy, Sir Maurice Steadman, W. C.
Channing, Sir Francis Allston Lewis, John Herbert Stewart-Smith, D. (Kendal)
Cherry, Rt. Hon. R. R. Lloyd-George, Rt. Hon. David Strachey, Sir Edward
Cleland, J. W. Luttrell, Hugh Fownes Strauss, E. A. (Abingdon)
Clough, William Macdonald, J. M. (Falkirk Burghs) Summerbell, T.
Collins, Sir Wm. J. (St. Pancras, W.) Mackarness, Frederic C. Taylor, John W. (Durham)
Corbett, A. Cameron (Glasgow) Macnamara, Dr. Thomas J. Thomas, Sir A. (Glamorgan, E.)
Corbett, C. H. (Sussex, E. Grinstead) Macpherson, J. T. Thomas, David Alfred (Merthyr)
Cotton, Sir H. J. S. M' Micking, Major G. Tomkinson, James
Craig, Herbert J. (Tynemouth) Marks, G. Croydon (Launceston) Trevelyan, Charles Philips
Crossley, William J. Marnham, F. J. Walsh, Stephen
Dalziel, Sir James Henry Massie, J. Walters, John Tudor
Davies, M. Vaughan- (Cardigan) Masterman, C. F. G. Warner, Thomas Courtenay T.
Dewar, Arthur (Edinburgh, S.) Menzies, Sir Walter Wason, John Cathcart (Orkney)
Duckworth, Sir James Montagu, Hon. E. S. Waterlow, D. S.
Essex, R. W. Morgan, G. Hay (Cornwall) White, J. Dundas (Dumbartonshire)
Esslemont, George Birnie Morgan, J. Lloyd (Carmarthen) White, Sir Luke (York, E. R.)
Everett, R. Lacey Morse, L. L. Whitehead, Rowland
Fenwick, Charles Myer, Horatio Whitley, John Henry (Halifax)
Ferens, T. R. Napier, T. B. Wilkie, Alexander
Foster, Rt. Hon. Sir Walter Newnes, F. (Notts, Bassetlaw) Williams, J. (Glamorgan)
Fuller, John Michael F. Nolan, Joseph Williams, Sir Osmond (Merioneth)
Gibb, James (Harrow) Norman, Sir Henry Wills, Arthur Walters
Glendinning, R. G. Nussey, Sir Willans Wilson, Hon. G. G. (Hull, W.)
Goddard, Sir Daniel Ford Nuttall, Harry Wilson, Henry J. (York, W. R.)
Gooch, George Peabody (Bath) O' Brien, Patrick (Kilkenny) Wilson, J. W. (Worcestershire, N.)
Greenwood, G. (Peterborough) O' Connor, John (Kildare, N.) Wilson, P. W. (St. Pancras, S.)
Grove, Archibald O' Donnell, C. J. (Walworth) Wilson, W. T. (Westhoughton)
Gulland, John W. O' Kelly, James (Roscommon, N.) Winfrey, R.
Harcourt, Rt. Hon. L, (Rossendale) Parker, James (Halifax) Wood, T. M' Kinnon
Harcourt, Robert V. (Montrose) Pearce, William (Limehouse) Yoxall, Sir James Henry
Harmsworth, Cecil B. (Worcester) Pearson, Sir W. D. (Colchester)
Hart-Davies, T. Philipps, Col. Ivor (Southampton) TELLERS FOR THE NOES.—Mr. Joseph Pease and Captain Norton.
Harvey, A. G. C. (Rochdale) Philipps, Owen C. (Pembroke)

Bill read the third time, and passed.

Amendments made: In sub-section (2), to leave out the words "becomes due" ["Increment Value Duty becomes due"], and to insert instead thereof the words "is to be collected."

In Sub-section (2), paragraph (d), to leave out the word "due" ["on which the duty is due"], and to insert instead thereof the words "to be collected."

In same paragraph, after the word "of" ["duty is due in respect of"], to insert the words "the fee simple of any land or of any interest in any."

After the word "the" ["the value"], to insert the word "total."

To leave out the words "the fee simple of."

In same paragraph, to leave out the words "as ascertained for the purposes of the assessment of duty under this Act," and to insert instead thereof the words "on that occasion to be estimated in accordance with the general provisions of this Part of this Act as to valuation."—[Sir W. Robson.]


proposed in Sub-section (2) to leave out the words, "subject to such deduction (if any) as the Commissioners allow in each case in respect of any part of the value which is proved to be attributable to buildings, structures, or other things of which the land is deemed to be divested under this Act for the purpose of ascertaining the site value, or to any matter in respect of which a deduction may be allowed under this Act in estimating that site value, or to the expenditure of money on any redemption of land tax or of any rent charge as defined in this Act effected after the thirtieth day of April nineteen hundred and nine, or to goodwill or any other matter which is personal to the owner, occupier, or other person interested for the time being in the land, and in the case of agricultural land, the value of which is due solely to its capacity for agricultural purposes, also, in respect of any part of that value which is proved to the Commissioners to be attributable to works of a permanent character, executed by or on behalf or at the expense of any person interested in the land, or to the good husbandry of any person in occupation of or interested in the land.

(3) The Commissioners shall record all allowances and deductions made under this Section." And to insert instead thereof the words, "in each case to the like deductions as are made, under the general provisions of this Part of this Act as to valuation, for the purpose of arriving at the site value of land from the total value."

Although this is merely a drafting Amendment, I think I ought to accompany that by some explanation. The word "subject" occurs at the beginning of the list of deductions that are to be made for the site value for the purposes of assessment after dealing with the occasions on which the tax is to be collected. The House will remember that under the Bill as it stood Clause 2 gave the occasions upon which the tax was to be collected, and it set out in the succeeding words the deductions that were to be made for the site value. There was another provision which set forth the means of ascertaining the original site value. Clause 2 was not very logical, perhaps. It gave us the occasional value, but in order to find out the original site value we had to turn to another Clause—Clause 14. It is the difference between the original site value and the occasional value that gives us the amount which the duty is to be charged. In order to make the two Clauses agree we incorporated into Clause 2, Section (2) the deductions which were to be allowed for the purposes of the site value. Now we propose to put all those deductions into one clause, hence the simpler words we are inserting in this Clause. They make no difference whatever after careful consideration of the new Clause. I say they make no change in the burden on the subject or in the deductions.

If the House will permit me I will go through the various deductions in the omitted words. It is provided first that all deductions are to be such as the Commissioners allow in each case in respect of any part of the value proved to be attributable to buildings, structures, and other things of which the land is deemed to be divested for the purpose of ascertaining the site value. In Clause 25 of the new Bill in the form which I think best—although I admit it needs a little explanation, I would draw attention to the first deduction to be made under the assessable site value. The assessable site value means the total value after deducting the amount which is to be deducted for the purpose of arriving at the first site value or gross value. What are the deductions which are to be made for the purpose of arriving at the total site value? The total value of land is defined by Clause 25, Sub-section (1), to be the amount which the fee simple of the land, if sold at the time in the open market by a willing seller in its then condition, might be expected to realise. It is to be deemed to be sold free from in-cumbrances. That, of course, gives its hypothetical value. But, in order to get at the full site value, you treat the laud as being divested of buildings, so that the difference between the gross value and the site value is to be found in the divestiture of buildings. The buildings are, in fact, swept away altogether, with any value which they may have given to the estate. I need not trouble about the timber. Therefore we see that assessible site value has to be reached after deducting from the total value the same amount that has to be deducted for the purpose of securing site value from gross value. That gives us the first deduction, that is the value attributable to buildings; that is the first deduction for the purpose of getting the assessible site value. That gives us the deduction which we had in the old Clause 2 in regard to any part of the value which is proved to be attributable to buildings, structures, or other erections. Therefore we have incorporated the first deduction. The next deduction was to be made in respect of the amount to be allowed under this Act in estimating that site value; there we have repeated all the old deductions under Clause 14. These were as they stood in the Bill, and were the deductions allowed under the old Clause 14, and there is no deduction allowed under the old Clause 14 which we have not re-enacted in our new Clause 25. And, moreover, we have extended our deductions to make them more favourable to the subject, but we have been careful not to alter or omit any deduction which was available to the subject. That is the first thing I am anxious to make clear to the House.

10.0 P.M.

The next has reference to the expenditure of money on any redemption of any Land Tax, or rent charge as defined in this Act. That deduction we have repeated in the assessible site value, Sub-section (4) of Clause 25, paragraph (a), where we state that there is to be a deduction of any part of the total site value which is proved to the Commissioners to be directly attributable to the expenditure of money in the redemption of any land tax or fixed charge, or the enfranchisement of copyhold land or customary freeholds, and so on. That is a new deduction which we have inserted, but, at any rate, all I am concerned now is to show that we have not omitted any of the old ones. The next deduction is goodwill or any improvement. In this paragraph (a) of Sub-section (4) we have given effect to a deduction for goodwill or any other matter which is personal to the owner or occupier or other person interested for the time being in the land. That brings in everything that we had in Clause 2 except the reference there to agricultural land. Our particular mode of dealing with agricultural land was thought inadequate, and therefore the words became unnecessary, because we have exempted agricultural value altogether and there is a complete exemption in regard to it. We have done rather better than the old provisions. Hon. Members contend that we have not given such great deductions as we gave before, but I contend that every deduction that we had in Clause 2 we have repeated in some other part of the Bill. Now the Commissioners, in Sub-section (2), are empowered to cause the deductions to be made in all these cases, and we have formulated them, and we desire that a record should be kept not merely for the purpose of increment value but for the purposes of other taxes, and therefore we have made a general Clause which imposes this very important duty upon the Commissioners. I think that justifies the Amendment.


I am not sure, Mr. Speaker, whether I ought to raise a point of Order before or after, but it is really wrapped up in these two Clauses, 25 and 2, and it really is very difficult to arrive at the real facts in regard to these deductions. It is perfectly clear, I entirely agree, that all the deductions that were made in the old Clause 2 are now repeated.


And a good deal more.


They are repeated to the full, and to some extent improved, but that does not constitute the whole case, and it is impossible to discuss this particular point, which is the whole point here, as to whether all the deductions that were allowed before are allowed again without referring also, as the Attorney-General has done, to Clause 25. These two Clauses have to be taken together as the whole foundation of the tax, and Clause 25 is really the primary foundation of the tax—that is, the original valuation is based upon Clause. 25. I would rather put it in this way: The taxes are arrived at by deducting the original valuation under-Clause 25 from the occasional valuation under Clause 2, and therefore, in order to arrive at the point at issue, whether these deductions are repeated or not, so far as their effect upon the tax is concerned, you have not only to ascertain whether all the deductions are still continued which were contained in Clause 2, but whether the original site value remains as it was before, because if the original site value was increased that would have the effect of reducing the tax. The original site value has to be deducted from the other, and therefore the more you increase the original site value the more you reduce the tax. If you reduce the original site value you increase the tax. I put this point with very great diffidence, because I am bound to say, and I think the House will agree, that it is extraordinarily difficult to follow the tax under this new terminology. We have now four values instead of two. We have got what the Attorney-General correctly described as the hypothetical value called the gross value, and then from that-hypothetical value you make an imaginary deduction. By that imaginary deduction from that hypothetical value you arrive at what is now called the full site value. It is clearly an imaginary deduction, because I think no one has ever seen land Absolutely divested of everything upon it. You have to imagine the land divested of everything that is upon it, and then you have to subtract that imaginary divestiture from the hypothetical value of land which has no burden upon it. That is the beginning. Why that is necessary I do not know. There is an algebraic formula which covers it very accurately: x—(xy) = y. Why you cannot say y instead of turning it into x—(xy) I cannot understand, but that is what it comes to. It is most complicated and very hard to follow. As Clause 25 left the Committee it contained less deductions than it does now in regard to the value of agricultural land, and in regard to that the Chancellor of the Exhequer used these words. He was asked in Committee to explain why a deduction in regard to the value of agricultural land was allowed under Clause 2 which was not allowed under Clause 25, and this was his answer:— The real object of that was to confer a special boon upon agriculture and that undoubtedly is the effect of it. The effect of it is that, whereas in every other case permanent improvements are deducted from the original value, in the case of agriculture they are not deducted from the original site value, but they are deducted when you Come to the increment, and there-fore it is to that extent a boon to agriculture. A deduction was made in Clause 2, which is not made in Clause 25. Now the same deduction is made in both Clauses, and, therefore, in the former case, the deduction being made in the case of the occasional collection and not being made in the case of the original collection, when the subtraction came to be made that produced a reduction of the increment value, and, therefore, of the tax. But now the deduction is similar in both cases, and is only made by reference. The deduction is the same on the two occasions, and there is no diminution of the tax, as there was before. Clause 7, which deals with agricultural land, deals only with land which has a purely agricultural value, and so long as it has a purely agricultural value. When once that land obtains a further value it becomes liable to the tax, and the tax is thus levied not only upon the increment, which is outside agricultural value, but upon the increment which is agricultural. So far as I can see, the claim which the right hon. Gentleman made distinctly indicates that there was a deduction, an indirect deduction, from the tax. That has now disappeared, and to that extent there is an increase in the burden of the tax, which, if it be so, will, of course, be out of order on the Report stage.


I think I shall be able to clear up quite satisfactorily the point which may appear, perhaps, from the quotation which the hon. and gallant Gentleman has given to be obscure. It is perfectly clear that every deduction, leaving agricultural land out for the moment, made originally under Clause 2, is repeated now in the new Clause 25. Not only that, but we have added other very considerable deductions. There is paragraph (c) of Sub-section (4), which is quite a new deduction, which is added for the first time, and there is the other with regard to the enfranchisement of copyhold or the expense of effecting the release of any covenant restricting the use of land These are two very substantial deductions. Now comes the question of agriculture. What is the position there? The method originally adopted by the Government for protecting agricultural land was the method indicated in Clause 2 as it stood originally, which was to give what I call a boon to agriculture, which meant that where the increment did not go beyond 40 per cent. there agricultural land was-exempted. That is what it amounts to. There were certain deductions which we did not make in the original site value for agricultural land which we made for the purpose of calculating the increment. We considered that that made a difference of about 40 per cent. in the case of agricultural land. That meant that in the case of agricultural land increased in value by over 40 per cent. it was exempt from Increment Duty altogether. That was regarded by many Members on both sides of the House as an inadequate protection for agricultural land, and we were pressed to give a fuller protection which did not depend upon such a complicated calculation as that, and to exempt agricultural land by clear and explicit phrases which would make it absolutely free from increment value altogether. That we did. We put down a new Clause, which was added. We could not then take out these words in Sub-section (2), although they were quite unnecessary, and therefore we moved a new Clause, which now stands as Clause 7.

"Increment Value Duty shall not be charged in respect of agricultural land while that land has no higher value than its value for agricultural purposes only."

That means this. Under the old provision, which still remains in Clause 2, if the increment on agricultural land got beyond that 40 per cent.—for instance, if it got doubled or trebled in value—it would be liable to Increment Duty. That is how it originally stood. But the moment that new Clause was inserted, it does not matter what the increment value of agricultural land may be, if it is purely agricultural it is exempted altogether. Therefore these words became quite unnecessary, and I made it perfectly clear that I should have to move their excision if a new Clause were added, and it is certainly preferable, as far as agricultural land is concerned. What agricultural land wants, naturally, is a Clause which explicitly declares that it is exempt altogether from the operation of Increment Duty, and it does not want to depend upon any such complicated arrangement as we originally intended for its protection. Therefore it will be absolutely necessary to leave these words out. It does not remove any protection which agricultural land enjoys, because it is exempt altogether.

The hon. and gallant Gentleman seems to think that there is a certain class of agricultural land which will not be exempted. That is not the case. As a matter of fact, there is a class of agricultural land which will be protected under our new Clause which was not protected before. That is as the new Clause is interpreted by us. I agree that that is a matter to be settled later on. If the words are not perfectly clear I will make them still clearer. I agree that there is a dispute as to the interpretation, but there is no dispute as to the intention. There is no dispute that we are quite willing to introduce any words to make it quite clear that agricultural land is to be exempted altogether. The words in Clause 2 are: "and in the case of agricultural land the value of which is due solely to its capacity for agricultural purposes." These words are not nearly so strong as the words we have in Clause 7, because these seem to bear upon the interpretation that if there is a value in the land other than agricultural, then you could not claim the exemption, whereas owing to our interpretation of the words in Clause 7 agricultural land would be entitled to that protection, although there might be other value so long as that value was not higher than the agricultural value. Therefore the protection given to agriculture under Clause 7 is much more ample than by the words in Clause 2. I submit to the hon. and gallant Gentleman that if we leave these words in they will really have an injurious and damaging effect upon agricultural land. They might introduce ambiguity, and it may be imagined that they are introduced for some purpose which may have quite a different effect from the one which we intend. Therefore I submit it is far better that these words should be eliminated, and that agriculture should depend entirely on Clause 7, with some words introduced later on, if necessary, to make it still clearer. I am not prejudging that point. I submit to the hon. and gallant Gentleman and others interested in agriculture that it would be far better to depend on making Clause 7 quite clear than that these words should be retained at this stage.


I am not sure whether you, Sir, are prepared to rule upon the point of Order which all Members who have given attention to it admit is one of the most important questions we have to consider. I think a great deal of what the Chancellor of the Exchequer has said really has no reference to the point at all. It is very important, and I do not in the least criticise the right hon. Gentleman for having said it. But it is not relevant to the exact question whether the effect of the Government proposal is to increase the burden in certain cases.


indicated dissent.


I do not think the whole of the Chancellor of the Exchequer's speech was relevant to that point. Part of it was, but so far an I could follow him there is a case for the view that the effect of the Government Amendment will be to increase the charge, and that that is not a thing which the House can deal with on the Report stage. It can only be done in Committee. Let me assume for the purpose of my point of Order that all that the Chancellor of the Exchequer claims for Clause 7 is fully done, and that it does entirely exempt purely agricultural land. I do not think that settles the point of Order, because we have to deal not merely with purely agricultural land, but with land which at the time of the original valuation is agricultural, but which subsequently obtains a non-agricultural value—a building, or other value. I think this arises under Clause 2. When the land was agricultural for the purpose of arriving at what we then spoke of as agricultural value you did not divest the land of its buildings. You only divested it of buildings if they were buildings put up for purposes other than agricultural. Therefore, the datum line from which you started to calculate increment was increased by the value of any agricultural buildings on the land. When you come to Clause 2 you deduct the value of those buildings. It is now proposed that the deductions should be exactly the same in the two cases. It is difficult to make it clear, but I may put it this way. Agricultural land was subject to an original valuation like everything else, but the original valuation of agricultural land was higher than that of any other land of the same kind, and that was claimed as an advantage for agricultural land, because naturally, the higher the valuation from which you start, the less will be the growth on which they will have to pay taxes. But that original valuation having been made on the land which was then agricultural, that is the datum line from which you calculate increment, whether the land continues agricultural or becomes industrial. The Government claims that if it continues agricultural, they have protected it under Clause 7, and, for the purpose of the point of Order, I accept that statement; and I desire to direct your attention only to the case of land which, having been originally valued as agricultural land, has now become industrial. The effect of the Government Amendments is to put both valuations, the original and the new one, on exactly the same footing, to make, as the Attorney-General pointed out, the deductions the same in each case. That is to say that the advantage which the land got by the higher datum given to it under the original valuations proposal is now destroyed. The margin of difference, when the difference comes to be calculated, will be greater; the apparent growth in value will be greater, and, therefore, the tax levied will be greater. If I have made my point clear, I shall be very grateful to have your ruling.


This matter is new to me. I have not been through the Committee stage, and therefore I am not so well qualified as other hon. Members who have had to deal with this matter. The matter is very confused to me, I admit; I feel bound to accept the view which the Government have announced, that the Amendments will not introduce any new charge. I have not been entirely persuaded by the arguments used by the Front Oppo- sition Bench. I will say this: if I have made a mistake in the matter it is always open to the Government to recommit in order to insert these Amendments. Therefore, if I am wrong in saying that no new charge is imposed by the Amendments of the Government no great harm is done, except the saving of a day's delay. It always would be open to the Government at the conclusion of the Report stage to move to recommit in order to insert these Amendments. Therefore, I conceive that no injury is done to the public or to the House by my accepting these Amendments. I conclude as I began, by saying that I wish to be perfectly frank with the House, and to admit that I did not entirely grasp all the arguments that were used.


I do not want to speak on the point of Order, but I want the Government to meet the argument. The narrow issue of the particular case which I have raised of land which was originally valued as agricultural land, which would have had the advantage of the higher datum level of the original value—of which it will now be deprived—and which will be valued exactly in the same way on the new occasion as on the original occasion, when, having ceased to be agricultural land, it becomes liable to-duty. I have stated the case, and I would like to hear the defence of the Government.


At the time I felt that it was a question really arising on Clause 25 and not on Clause 2. The only point to decide on Clause 2 is whether all the deductions were made on the second occasion and not upon the first. I agree that when we come to Clause 25 that is a point which may or may not arise. I do not take the view of the right hon. Gentleman that that is the case. I am quite prepared when we come to Clause 25 to demonstrate that, but it is quite clear that we cannot have the Debate twice over. I do not mind having the Debate on Clause 25 at this stage, but I rather deprecate having the Debate twice. There are very considerable drafting alterations to Clause 25, and it will be quite open to the right hon. Gentleman to say that they go beyond pure drafting, and may even go to the merits, though I do not believe they will. At any rate, I deprecate a discussion twice over. The only point we are now discussing is whether all the deductions in the second valuation are included in the Amendments of the Atorney-General. If the right hon. Gentleman the Leader of the Opposition and his colleagues would prefer having a Debate upon the whole of the alterations of Clause 25 at this stage, it is well worth considering, but I think it is quite impossible to have the Debate twice over.


That is not quite my point. The point I am asking the Chancellor of the Exchequer to address himself to is this, that formerly deductions in Clause 2 differed from the deductions in Clause 5. By striking out these words you are asking that the deductions shall be exactly the same in both cases.


If the right hon. Gentleman looks carefully through the Bill as it left the Committee, and compares it with the deductions made now, he will find that there is not a single deduction which is not identical, and the whole operation of Sub-section (2) as originally drawn has reference to the first occasion, rather than the second. There are no new deductions; there is no deduction which was originally in the second occasion which is not in now. That is all we are doing at present. It is the first the right hon. Gentleman is really complaining of, and that is a matter for Clause 25. I think I shall be able to point out when we come to that that we are making no difference, except as a matter of drafting.


We are in this case more or less in the hands of the Government. I entirely agree with the Chancellor of the Exchequer when he says it would be extremely inconvenient to have the same discussion twice over. To that I assent. The Government are strongly of opinion that the proper place to take it is on Clause 25. If that be so, anything we gain from the discussion will be gained in larger measure on Clause 25 than now. Under those circumstances—and I am speaking for my right hon. Friend (Mr. Austen Chamberlain), as he cannot speak again—I am prepared, so far as we on this bench are concerned, to say that the discussion had better take place on Clause 25. The point is very difficult and also extremely important, because it does touch some vital issues.

Question, "That the words proposed to be left out stand part of the Clause," put, and negatived.

Question, "That the words 'in each case to the like deductions as are made, under the general provisions of this Part of this Act as to valuation, for the purpose of arriving at the site value of land from the total value' be there inserted," put, and agreed to.


moved to leave out Sub-section (4).

This is a Sub-section that related to apportionment. We have now transferred the words there dealing with apportionment to Clause 29, so as to give them more general application to the other taxes.

Amendment made.


moved to leave out-Sub-section (5), and to insert instead thereof:—

"(3) Where it is proved to the Commissioners on an application made for the purpose within the time fixed by this Section that the site value of any land at the time of any transfer on sale of the fee simple of the land or of any interest in the land, which took place at any time within twenty years before the thirtieth day of April, nineteen hundred and nine, exceeded the original site value of the land as ascertained under this Act, the site value at that time shall be substituted, for the purposes of Increment Value Duty, for the original site value as so ascertained, and the provisions of this Part of this Act shall apply accordingly.

Site value shall be estimated for the purposes of this provision by reference to the consideration given on the transfer in the same manner as it is estimated by reference to the consideration given on a transfer where Increment Value Duty is to be collected on the occasion of such a transfer after the passing of this Act.

This provision shall apply to a mortgage of the fee simple of the land or any interest in land in the same manner as it applies to a transfer, with the substitution of the amount secured by the mortgage for the consideration.

An application for the purpose of this Section must be made within two months after the original site value of the land has been finally settled under this Part of this Act."

This is an Amendment which extends slightly the exemption in favour of the subject. The original Sub-section was, as the House will remember, to give a benefit to the landowner who had acquired his property within the preceding 20 years at a higher value than it had on 30th April, 1909. Of course, it is the owner's interest, so far as Increment Value Duty is concerned, that it should have a high value on 30th April, 1909, because the duty is to be collected on the amount in excess of that value. It was pointed out that there were cases in which the landowner had given a larger sum previously, and that the land had depreciated in value. Therefore it was asked on his behalf that the larger price he had given before 30th April, 1909, should be substituted as the original site value and as the dividing line above which Increment Value Duty would be charged. We have kept that object in mind, but extended it in this way, not merely where the owner has purchased but wherever it is proved to the Commissioners that the higher value was given. The original words were "where the owner of a fee simple of any land….acquired within twenty years" and so on, and the new words are "where it is proved to the Commissioners on an application made for the purpose…that the site value of any land at the time of any transfer on sale of the fee simple of the land…which took place within twenty years before the thirtieth day of April, 1909 exceeded the original site value….the site value at that time shall be substituted for the purposes of Increment Value Duty…" By those words we retain and extend the existing provision. The next paragraph follows on that, and secures to the landowner the benefit of all deductions. The next words repeat the other part of the original Subsection as to mortgages. The last paragraph, however, is fresh.


I entirely concur with the Attorney-General that all the general provisions are repeated; but the last paragraph is clearly a new limitation. I do not complain of that. It is perhaps desirable to have some limitation, but I think three months would probably be better than two. There was no limitation before. There is not a great deal in it, but it might be safer to say three months. A man might be abroad, for instance.


We will make it three months.

Question, "That the Sub-section proposed to be left out stand part of the Clause," put, and negatived.

Question proposed, "That the proposed words (the word 'three' being substituted for the word 'two' in the last paragraph) be there inserted."


It is proposed, in valuing a mortgage, to take the amount secured by the mortgage. Is that quite a sound way of valuing a mortgage? At first sight it is certainly startling to me that you should, under any circumstances, estimate the value of land by the amount secured by the mortgage.


It is entirely for the mortgage's benefit.


May I ask the learned Attorney-General what is the effect of this Amendment in calculating the site value for the purposes of Undeveloped Land Duty? It seems to me to have an advantage so far as the Increment Tax is concerned. Yet if the same method of calculation is pursued when you come to collect the Undeveloped Land Duty on the same land, it has a great disadvantage; and, moreover, an unfair disadvantage, for although the reason for this Amendment is that the land in the meantime may have deteriorated, therefore when increment is due it is merely assuming the former value, yet that argument would not apply in the case of Undeveloped Land Duty. Here, if the land was at the time at low ebb it would be a disadvantage to have it calculated as to its site value on the period when it was at the higher level. It appears to me, reading the Amendment and the Clause in regard to Undeveloped Land Duty, that the effect of it may be that when Undeveloped Land Duty comes to be charged the site value on which it was charged would be the higher and not the lower site value.


The objection taken by the Noble Lord comes not so much on this particular Amendment as on the original exemption. The answer to that is this: No doubt a higher original site value may be used against the owner for the purpose of Undeveloped Land Duty, but the owner in that case would not claim the exemption.


May I point out that the two cases are not the same, because in the Increment Tax the land is not charged increment, because it is merely reassuming the former value which it had. In the Undeveloped Land Duty that is not the case, because it is put on the existing site value of the land. I think it makes a distinction.


I do not think that meets the observations I have just made. There may be cases where, having regard to the Increment Value Duty, it may not pay the owner to seek the benefit of this exemption. In those cases he will not seek it.