§ (1) On the determination of any lease of land there shall be charged, levied, and paid, subject to the provisions of this Part of this Act, on the value of the benefit accruing to the lessor by reason of the determination of the lease a duty, called Reversion Duty, at the rate of one pound for every full ten pounds of that value.
§ (2) For the purposes of this Section the value of the benefit accruing to the lessor shall be deemed to be the amount (if any) by which the total value of the land at the time the lease determines, subject to the deduction of any part of the total value which is attributable to any works of a permanent character executed by the lessor and of all compensation payable by such lessor at the determination of the lease, exceeds the total value of the land at the time of the original grant of the lease, to be ascertained on the basis of the rent reserved and payments made in consideration of the lease, but where the lessor is not the freeholder the value of the benefit as so ascertained shall be reduced in proportion to the amount by which the value of his interest is less than the value of the freehold.
§ Lord ROBERT CECILmoved, after the word "land" ["On the determination of any lease of land"], to insert the words "granted after the thirtieth day of April, nineteen hundred and nine."
§ I am quite conscious that the question raised by this Amendment was discussed on the Committee stage, but I should like to submit my point shortly. We have been constantly assured by the Government that one of the great principles of Increment Value Duty is that it does not attack any increment which had accrued before 30th April, 1909. But when you come to Reversion Duty, for some reason which has never really been explained to the House, that principle has been abandoned, and it is proposed to tax 370 the increment—for it is put forward as another form of increment—and it is to be taxed even though it has accrued before the date of the Act coming into operation. There are many arguments which have been used to defend the position of the Government as to Increment Duties, but they are much less strong than can be used with reference to the Reversion Duty, which arises in this way: A man makes an agreement with another who holds the land on a certain rent. On the expiry of the lease, if it turns out that the land might have been let at a higher rent than the rent at which it was let, then under the provisions of the Act the lessor is deemed to have obtained an increment value which is subject to the tax. The whole of that increment depends necessarily upon the agreement which he has made with the outgoing tenant, because it is quite clear that if he first let the land at a rack rent and not at a small rent, then on the termination of the lease no increment would accrue at all. He will get no advantage at all if he has let the land at the full value which it has. Obviously then he will not have anything much to-get, and he cannot get more out of the land than that which has already been given. It is only, therefore, in the case where, for some reason or another, he has not let the land at a rack rent that this increment arises at all. That being so, it is really a case in which the Government seek to obtain some money from an individual who is fettered by the contract into which he has entered. We have had many declarations from the Government that they disapprove of any legislation which breaks existing contracts. But this legislation clearly does that. Here is a man who, if he were allowed to start afresh, could easily so arrange his contract with his lessee that no Reversion Duty would accrue, no advantage would accrue, on the determination of the lease; but because in ignorance, necessary ignorance of the legislation that was intended, he made a particular contract, it may be 50 or 60 years ago, therefore he may be taxed. I do think that is a very unfair position in which to put anybody under all the circumstances. When we come to consider the nature of the facts, I think it is still more unfair than it would otherwise be, because this alleged increment is really a figment of the Government's imagination, or it may be a pure figment of the Government's imagination. There may be no increment whatever. It may be that instead of taking the whole period during the 371 tenancy of the lease, for reasons which are excellent to the owner of the land, he has deferred a certain portion of his profit until the end of the lease. He lets the land very much below its full rack-rent value, because he desires it to be developed by a builder; he does not wish to hamper the development by imposing a heavy rent. I daresay that is ultimately in his interest, but it would also be in the interest of those who desire to develop the land. Therefore he allows—it is the ordinary practice—the building lessee to take the land at considerably less than its true market value, because at the end of the time he is to receive back his land with the buildings thereupon, and is then to be able to let it at an increased rent. In other words, he defers, intentionally and deliberately, a certain portion of the profit which, as long as private property in land is recognised, he is entitled to get for the purpose of subsequently getting it at the end of the lease. It is only in those cases that this tax be comes operative at all. Why on earth it can be right to tax a man who does that, and to let off a man who insists on the full rent for every year for which the tenancy is current, has always passed my comprehension.
§ I have never been able to understand how this particular tax could be defended. You may have cases, cases which exist in the development of big building estates, where a certain number of plots are let at a full rental. The remainder of the plots are let at very much less than the rental, not necessarily at a nominal rent, but at quite a small rent, and certain covenants are taken in respect of both portions. At the end of the term created those plots which have been let at their full value will not have to bear—or, rather, the owner, in respect of those plots, will not have to bear—a penny of taxes, because there will be no increase in the value of the land according to the machinery set up by the Government. But in those cases where he has let at less than the real value, for excellent reasons, on the very same estate at the same time and under precisely the same conditions, under the scheme of the Bill he will have to pay this tax. He will not be allowed as an alternative to put an end to his agreement, and make a fresh agreement which would enable him to make an agreement by which he would not he liable to the tax at all. I think the unfairness becomes patent when you observe how the Bill will operate hence- 372 forth or the moment it becomes law. Henceforward no one will make an agreement which will bring him within this tax. The land, instead of being let on long leases, will be let for 21 years, and in that case no Reversion Duty will be payable at all. If for some reason it becomes necessary to let on long lease, every landlord will take care that the utmost rent that can be exacted will be exacted, so that when the lease comes to an end no Reversion Duty will be payable. That is the operation of the Bill.
§ My own belief is that nothing in the world the Government could have selected to do will have a more unfortunate effect, particularly in the urban districts. Everybody knows, I have heard of it in my capacity as representing an urban district, that one of the great grievances is precisely that when a tenant puts in money, builds up a business in a relatively short time, that at the end of the term he is liable to be turned out, and the land let over his head. I have always thought myself it was a very hard case, an exceptionally hard case, and one which I quite agree there is difficulty in devising machinery to meet, but if it could be possibly dealt with I think it is a case which deserves the attention of Parliament. But this Bill will make the thing far worse. The interest of landlords will now be to let their property on as short leases as possible, and this will give them far more opportunity and far more temptation to exert their rights harshly and severely at the end of the lease. I myself bitterly regret this particular proposal of the Government. I do not think it is going to be a great hardship on the landlord. It is not going to be very important, from a monetary point of view. I have not the exact figure before me, but I think the Chancellor estimated it as £300,000. He certainly does not expect, and he cannot expect, any increase from this particular tax. On the contrary, as the years go on, this tax must decrease very rapidly. It is going to do a great deal of harm to the tenant in urban districts, and it is going to be a most unfortunate tax from every point of view. I think if it is to be sanctioned at all the House ought to take care that it is not retrospective, and that it should only be imposed on leases which come into being after the date of the passing of this Act. For that reason I propose to insert those words.
§ Mr. WATSON RUTHERFORDI rise to second the Amendment. This is a tax in respect of a contract, as the Clause stands, made years ago. In the majority 373 of cases where anything substantial is to come from it, it would be a tax made on contracts entered into about 70 years ago. It appears to me that the tax itself proceeds upon a false assumption. My hon. and learned Friend (Lord Robert Cecil) has pointed out what it is, and I would put that false assumption in this way. The real consideration for the lease, to start with, included in cases where there is a sum of money paid, that sum as part of the consideration. The second part of the consideration, and the main part, was the rent payable under the lease year by year, and the third part was the right to the reversion with, we will say, the buildings upon it. In cases where those buildings are to be erected the tax would be a very considerable sum, but where this tax is going to fall with the greatest possible hardship on the taxpayer is in respect of those lands where building land was leased years ago, and where during the next period of years, while this tax is in operation, this lease runs out. I take the view that the consideration originally consisted of the three parts I have mentioned, and that the right to receive the land back, together with those improvements upon it in accordance with the covenant, was just as much part of the original consideration as any other part of that consideration. If I am right in that, adding up all those elements in the consideration in order to make the original consideration to start with as compared with what the value to-day would make, would result in a comparatively small tax.
Everyone knows what is in the mind of the Chancellor of the Exchequer with regard to this tax. It is this, that there are a large number of landlords, especially in what are now urban districts, who have made these leases upon comparatively small rentals years ago, and which now, owing to the increase of the cities owing to the increased value, all property generally in those localities have attained a very considerable value, and it is a piece of that value that has been growing during the last 70 or 80 years, that the Chancellor of the Exchequer now wants, and not, as in the case of the other taxes, a piece of the value that is going to accrue from this time forward. Therefore, unless this Amendment be adopted, the effect of the proposal will be to put a tax upon the subject-matter of contracts made years ago. My Noble and learned Friend (Lord R. Cecil) said that the increased value to-day would be part of the profit. I would prefer to say that 374 it is really part of the original consideration, and not necessarily profit at all. It may have been part of the original price which the man was entitled to get when the contract was originally made, without there being any element of profit in it whatever. Some of us do not think much of the leasehold system. I am one of those who consider the system of building leases to be a bad one, that it has been on the whole a curse to large portions of the country, and that it ought to be put an end to. But that would be the subject of an Enfranchisement Bill, and that is not the question before the House at present at all. Whatever may have been the reasons which originally caused that system to become so general in large portions of the country, those reasons no longer exist to the same extent. That, however, is not the point. If the leasehold system is a bad one, why do not the Government bring in a Bill to put an end to it? But they say that under the circumstances which have arisen landlords are coming in for money which they ought not to get. The argument used on the platform is practically that it is an immoral thing for this, that, or the other duke or landowner to be declining to-day to renew leases and coming in for immense values which he has personally done nothing to create. If you apply that to the existing state of affairs, the argument will be that this is a wrong system, which ought to be put an end to. "No," say the Government, "not at all. We so far approve of the system that we want a share of the plunder for ourselves." The Amendment simply proposes that the tax should be imposed in respect of leases made after the date of the Act. That would put this tax on the same footing as the other taxes in the Bill, and if people enter into these contracts then they will enter into them with their eyes open, knowing that one-tenth of the profit, if there is any, on paper or otherwise, at the end of the lease will fall in to the State. I look upon this tax as probably the most immediately remunerative of the Land Taxes, but possibly the one which will turn out to be worth little or nothing later on, because of the certain destruction of the leasehold system to which some Government will find it necessary to put an end. Upon these grounds I beg to second the Amendment.
§ Mr. LLOYD-GEORGEThis question was debated in the Committee stage. I do not know that even the Noble Lord has added anything fresh to the considerations 375 then urged in favour of the Amendment, and I am perfectly certain that I cannot add anything fresh in reply. The effect of the Amendment is that we should provide revenue for 80 years hence. I have been criticised because by these Land Taxes I am not providing much revenue this year, that my revenue will come next year; but the Noble Lord wishes to improve upon that. His idea is to provide revenue, not for this year or next year, but for 80 years hence. That is quite a, new idea of a Budget. A tax which will come into operation 80 years hence is of very little use to meet the immediate necessities of the hour. But the Noble Lord is not sure that it will produce anything 80 years hence. On the contrary, he rather suggested that one of his reasons for confining it to leases made after 30th April this year is to enable the parties "to make arrangements." That, of course, means arrangements to prevent the Reversion Duty from having any operation at all. Therefore, the Noble Lord's idea of a Budget is to put in words which will not provide anything this year, next year, or even 10, 20, or 50 years hence, but which may enable arrangements to be made so that at the end of 80 years the proposal will be perfectly illusory. That is a very grotesque notion of what a Budget ought to contain. The hon. and learned Member for the West Derby Division of Liverpool (Mr. Watson Rutherford) takes exactly the same view of the leasehold system as I do, namely, that it is a thoroughly vicious system. I thought, when he came to express his own views, his speech was in favour of the Bill as it stands. He says, first of all, that this Reversion Duty is going to be the most immediately remunerative of all the taxes. But that is a very strong argument in its favour, because, after all, the first object of a Budget is to raise money. Therefore, the hon. and learned Gentleman defended the Reversion Duty in its present form by suggesting that it will be a great success. His second argument is that the leasehold system is a very bad system, and that one effect of this tax will be to put an end to it. Therefore, he has advanced two conclusive arguments from my point of view in favour of the duty as it stands.
§ Mr. PRETYMANHe did not say so.
§ Mr. LLOYD-GEORGEPerhaps the hon. and gallant Gentleman will allow the hon. and learned Gentleman to answer for 376 himself. My experience of him is that he is quite capable of doing so; and he is not only capable of doing so, but always very ready to do so. What is meant by making complete arrangements is that the landlord will find it profitable to continue a system of this kind. I believe that, on the whole, the tax will produce a revenue for the next 60 or 70 years. In addition to that I think the effect will be a real deterrent upon the extension of this system of leasehold, which is a thoroughly bad one. The noble lord referred to builders.
§ Lord ROBERT CECILI said nothing about builders.
§ Mr. LLOYD-GEORGEI put down what the Noble Lord said.
§ Lord ROBERT CECILI said the interest of the tenant.
§ Mr. LLOYD-GEORGEWell, I am using the words in the sense of the interest of the lessee. There is a certain class of persons who are forced to become lessees in order to secure land at all for building purposes. Their interest undoubtedly is to put an end to the system, because what does it mean? A man who builds a house upon a lease has considerable difficulty in raising money upon it. The Noble Lord cannot possibly deny that. He would not get anything like the same proportion as if the property were freehold. Mortgagees, too, are very shy of advancing money, because year by year the security is depreciating apart from the depreciation of the building. From the point of view of the lessee there could not be a worse system. In conclusion, let me say that it is suggested that the reversion is part of the consideration.
§ Mr. WATSON RUTHERFORDHear, hear.
§ Mr. LLOYD-GEORGEThe hon. and learned Gentleman knows that though nominally that is so, it is not really so. If the hon. and learned Gentleman were prepared to say that in the vast majority of cases landlords are taking lower ground rents, then I think there would be something in it. But they are not. You simply have the landlord, who undoubtedly exacts the best ground rent he can without any regard to the fact that at the end of 60 or 70 years the property comes back to him.
§ Lord ROBERT CECILThe right hon. Gentleman surely recognises that there are numberless cases of building schemes 377 where the rent is so low as to be practically nominal, and the only reason is that the reversion at the end is going to restore the property.
§ Mr. LLOYD-GEORGEI deal with that case, which I have admitted, and have an Amendment on the Paper in connection with it. That is absolutely a bonâ fide case. There are cases—I heard of one in London the other day—where the rental of the leases was limited—something like a few shillings. The real consideration there was undoubtedly the reversion.
§ Lord ROBERT CECILIt is in all the other cases.
§ 9.0 P.M.
§ Mr. LLOYD-GEORGEI have an Amendment down to meet that case, but if the Noble Lord will take the majority of cases he will see that, after all, the landlord exacts a rack-rent. All the Noble Lord has got to do is simply to get the proper rents which are charged in similar circumstances in Scotland, where the lease is a perpetual one, with the charges made with the same class of land and the same class of town in England. He will find the rents in Scotland compare quite favourably with the rents in this country.
A contract between individuals is no reason why the State should not tax. There are two cases. One is the case put by the hon. and learned Gentleman where there is an actual increase in the value. I referred to it before. When that lease was granted, the landlord got a rent of between £300 and £400. At the time the lease expired the land was worth more, and the landlord gets a rent of over £4,000 and a premium which runs into thousands. Surely that is a case where there is increment? There we will exact 10 per cent. There are other cases where you have no increment. The landlord gets the house which is really no part of the actual consideration. When the country is in need of money, when it has got to tax some property—to tax means in some shape or other—I cannot conceive any position more fair than to impose that taxation upon that property that accrues so easily to the landlord under those conditions.
§ Viscount CASTLEREAGHThe right hon. Gentleman has hardly endeavoured to give any justification for his objection to this Amendment. I can see no justification whatever for interference in this way in the bargain which has been made willingly by individuals by the lessor of the 378 ground so that it will come back to him at a future date. The right hon. Gentleman speaks about the idea of the Budget, and says the Chancellor of the Exchequer is in need of cash. There are other ways of gaining money than by taking advantage of a contract which has been made willingly by two individuals; than that the State should step in and take a portion of the money which under no circumstances is due to it. With regard to the leasehold system, I have no doubt there are in it a great many defects. The right hon. Gentleman cannot deny that it embraces an arrangement which has been made for some years past, and will fall in some years to come. By far the great majority of leases in this country, the right hon. Gentleman knows, have been let for absolutely a nominal sum on the understanding that at the end of the 99 years the property would came back to the owner. It is quite understandable, as the right hon. Gentleman said, but as regards the principle it does not matter whether the rents are nominal or nearly nominal. The principle that seems to pervade the whole of this Bill is that it brings in a certain measure of money and puts some form of custom to an end. The leasehold system is a very old system, and to endeavour to step in between the contracting parties in order to raise a certain amount of money for the State is one of the most unjustifiable methods the Chancellor of the Exchequer could have resorted to. We know perfectly well the Government and the Treasury are in need of money, but to step in in this interfering manner in regard to an old custom and to endeavour to obtain 10 per cent. for the Government of money which really and honestly belongs to the individuals is, to say the least of it, a very unjustifiable course of policy for the Chancellor of the Exchequer to attempt to pursue. These leases are the result of a bargain made which has been agreeable to all parties concerned. Why is the right hon. Gentleman going to penalise one of the parties to the bargain? It is no answer for the State to say that a certain amount of benefit is going to accrue to one of the parties. That is no answer to their taking away 10 per cent. of it. I see no justification for such a course, and I should have thought that the right hon. Gentleman the Chancellor of the Exchequer would have endeavoured to justify his position. He has not done so, and I suppose he has not done so because there is no possibility of his doing so.
§ Mr. PRETYMANI must say the Chancellor has not made a very good defence for this tax. His only defence is that it will bring money into the Exchequer, but that surely is not a sufficient defence. He has got to prove that the tax is a just and reasonable one, as well as proving that it will bring money into the Exchequer. The right hon. Gentleman attempted to show that this tax is just, but I think if he only looks at the exemptions that he himself is inserting he will see that it is not just. There are two principal exemptions in regard to this tax. One is that which has already been mentioned, namely, the one where the consideration is nominal. Where the consideration is nominal full allowance is to be given for the value of the contract to the builder. How are you going to draw the line between them and where the consideration is nearly nominal, as it commonly is? A large proportion of the large houses in London are built upon a 99 years' building lease. The original ground rent was about £5 a year, and upon these were built houses of very considerable value. The way this works out is this. A builder like Mr. Cubitt took a lease of an area of land. He built several houses under that lease. The consideration in most cases was about £5 per house, and the houses now are of a rateable value of from £700 to £800. On what possible principle of equity can you say that where the consideration was purely nominal, or was of peppercorn value, allowance is to be made for the contract to build, but where the consideration was £5 no allowance whatever was to be made? Take the case of two owners with 80 years to go. These two owners have made a contract to let a piece of land for building houses of equal value. One has exacted the peppercorn rent, the other has exacted a £5 ground rent on the contract to build. What is the relative position of these two men when the land falls in and they become liable to the tax? One of the owners will have to pay upon the difference between the capitalised £5 and the full value of the rent at the termination of the lease. The £5 capitalised is the only deduction he will be allowed to make. You multiply that £5 by 20 or 25 years, and you get £125 as the capital value, fixed by this Bill, of the land at the commencement of the lease. But now there is a house which is worth £800.
That means an enormous tax upon that particular individual. Every owner who has let his land at a peppercorn rent is going to be allowed the whole cost of the 380 house, and his tax will be small. On what ground do you put a tax upon A on property let under exactly similar conditions to that of B, while you let B practically off with nothing. It is not sufficient to say that you are going to get money from it, and that it is going to be fruitful. Why call it a tax at all in these circumstances? Why should not the Chancellor say "A, C, and X are persons who can afford to pay me something. B, D, and Y are not, and I do not mean to send any demand note to them. But I will send to A, C, and X a demand to pay me £1,000." Why go through the form of calling it a reversion? It simply amounts to nothing less than that at the will of the Chancellor of the Exchequer of the moment a certain number of persons are sent a demand note exacting a large penal tax from them, while other persons in exactly similar positions are let off scot free. I say the exemptions which the Chancellor of the Exchequer is making affords an absolute and real condemnation of the whole principle of the tax.
Then there is the other exemption which equally to my mind condemns the tax, and that is where the lease has been purchased at any time prior to 30th April last, and where there is less than 40 years to run at the time the lease was purchased, you give absolute exemption. What possible justification is there for that? These exemptions condemn the principle of the tax and show that you cannot apply it to anything approaching the area it attempts to cover. It means a few unfortunate individuals are to be arbitrarily selected and mulcted while the bulk of the property which you profess to tax gets off scot free. Upon whom is this tax really going to fall? The Chancellor of the Exchequer gave the answer yesterday when he said that when leases fall in, when a capital sum was required, the leaseholder would get it by exacting a premium. That is exactly what will happen. Every hon. Member knows that in an ordinary case in London ground landlords do not exact the full measure of the rack rental value. There is a margin. [An HON. MEMBER: "They do."] Well, that is not my experience. I know a case where since this Bill was introduced a lessee of a property in London renewing his lease had arranged provisional terms with the landowner, and the demand was made from him of an additional sum to carry this duty, and he had no choice but to pay it. Where a full rack rental value is exacted it is clear the burden cannot be put upon anybody else. Where the owner 381 is making an arrangement with his tenant to renew, and that tenant is much interested in renewing, and where the extreme full rack rental value is not exacted, it is a common case that this tax will simply be added on to the premiums which will have to be paid by the lessee, and this will aggravate the lessee's position and increase the burden placed upon him. Personally I dislike the leasehold system, and I think it is better to feu right out or to sell. I entirely agree with that method, and in any transactions with which I have been concerned I have always followed that principle. The leasehold system sounds pleasant at the beginning, but I think it ought to be a feu. I agree with the Chancellor of the Exchequer that where a man has so little money that he is obliged to borrow to build his house he will borrow to a greater advantage on a freehold than on a leasehold. What a man likes to have is an annual payment with a perpetual feu, because that is a great advantage. It is a very curious thing, but you will find in particular towns and districts they have their own system to which people are accustomed, and which they like to follow. You will find districts where nobody will look at anything but a freehold and where the leasehold is an exception. You will also find other districts where it is the custom to feu or to lease, and they do not
§ like to depart from that system. The lawyers who negotiate the building leases and the bargains understand the system and are used to it, and things work smoothly if it is a perpetual feu.
§ Mr. LLOYD-GEORGEYes, that is a different matter.
§ Mr. PRETYMANAt any rate, the machinery is the same. If this proposal would not permit any injustice, and had the effect of creating future feus instead of terminable leases, it would be a very good thing, but I do not think it will have that effect at all. I honestly believe that the two exceptions to which I have referred are a real proof in themselves of the impractical, unjust, and arbitrary character of this tax, and, although I know the Chancellor of the Exchequer requires money, I think this tax is so bad in its principle that, great as the need is for money, he would be far wiser to leave this tax out altogether and take his money in the form of increment value. I think the proposals we are considering are very injurious, and I hope the right hon. Gentleman will see his way to accept this Amendment.
§ Question put, "That those words be there inserted in the Bill."
§ The House divided: Ayes, 41; Noes, 177.
383| Division No. 816.] | AYES. | [9.20 p.m. |
| Acland-Hood, Rt. Hon. Sir Alex. F. | Gordon, J. | Ridsdale, E. A. |
| Balcarres, Lord | Goulding, Edward Alfred | Salter, Arthur Clavell |
| Baring, Capt. Hon. G. (Winchester) | Gretton, John | Scott, Sir S. (Marylebone, W.) |
| Bellairs, Carlyon | Hope, James Fitzalan (Sheffield) | Smith, Abel H. (Hertford, East) |
| Bull, Sir William James | Kimber, Sir Henry | Stanier, Beville |
| Carlile, E. Hildred | King, Sir Henry Seymour (Hull) | Talbot, Lord E. (Chichester) |
| Castlereagh, Viscount | Lowe, Sir Francis William | Valentia, Viscount |
| Coates, Major E. F. (Lewisham) | Morpeth, Viscount | Walker, Col. W. H. (Lancashire) |
| Davies, David (Montgomery Co.) | Oddy, John James | Walrond, Hon. Lionel |
| Doughty, Sir George | Powell, Sir Francis Sharp | Williams, Col. R. (Dorset, W.) |
| Douglas, Rt. Hon. A. Akers- | Pretyman, E. G. | Younger, George |
| Faber, George Denison (York) | Randles, Sir John Scurrah | |
| Fell, Arthur | Ratcliff, Major R. F. | TELLERS FOR THE AYES.—Lord Robert Cecil and Mr. Watson Rutherford. |
| Fletcher, J. S. | Rawlinson, John Frederick Peel | |
| Gardner, Ernest | Renwick, George | |
| NOES. | ||
| Agar-Robartes, Hon. T. C. R. | Black, Arthur W. | Cheetham, John Frederick |
| Allen, A. Acland (Christchurch) | Brace, William | Cherry, Rt. Hon. R. R. |
| Allen, Charles P. (Stroud) | Brigg, John | Cleland, J. W. |
| Astbury, John Meir | Bright, J. A. | Clough, William |
| Balfour, Robert (Lanark) | Brooke, Stopford | Cobbold, Felix Thornley |
| Baring, Godfrey (Isle of Wight) | Brunner, J. F. L. (Lancs., Leigh) | Collins, Sir Wm. J. (St. Pancras, W.) |
| Barker, Sir John | Brunner, Rt. Hon. Sir J. T. (Cheshire) | Corbett, A. Cameron (Glasgow) |
| Barlow, Sir John E. (Somerset) | Bryce, J. Annan | Corbett, C. H. (Sussex, E. Grinstead) |
| Barry, Redmond J. (Tyrone, N.) | Buckmaster, Stanley O. | Cotton, Sir H. J. S. |
| Beale, W. P. | Burns, Rt. Hon. John | Dalziel, Sir James Henry |
| Beauchamp, E. | Burt, Rt. Hon. Thomas | Davies, Sir W. Howell (Bristol, S.) |
| Bell, Richard | Byles, William Pollard | Dickinson, W. H. (St. Pancras, N.) |
| Benn, W. (Tower Hamlets, St. Geo.) | Cameron, Robert | Dilke, Rt. Hon. Sir Charles |
| Bennett, E. N. | Cawley, Sir Frederick | Duckworth, Sir James |
| Berridge, T. H. D. | Channing, Sir Francis Allston | Dunn, A. Edward (Camborne) |
| Edwards, A. Clement (Denbigh) | Keating, M. | Roberts, Charles H. (Lincoln) |
| Edwards, Sir Francis (Radnor) | Kelley, George D. | Roberts, Sir J. H. (Denbighs) |
| Essex, R. W. | Lamb, Ernest H. (Rochester) | Robinson, S. |
| Evans, Sir S. T. | Layland-Barratt, Sir Francis | Robson, Sir William Snowdon |
| Everett, R. Lacey | Lewis, John Herbert | Roch, Walter F. (Pembroke) |
| Falconer, J. | Lloyd-George, Rt. Hon. David | Roe, Sir Thomas |
| Fenwick, Charles | Luttrell, Hugh Fownes | Russell, Rt. Hon. T. W. |
| Ferens, T. R. | Macdonald, J. M. (Falkirk Burghs) | Samuel, Rt. Hon. H. L. (Cleveland) |
| Fiennes, Hon. Eustace | Maclean, Donald | Schwann, Sir C. E. (Manchester) |
| Fullerton, Hugh | Macpherson, J. T. | Sears, J. E. |
| Gibb, James (Harrow) | MacVeagh, Jeremiah (Down, S.) | Shackleton, David James |
| Gibson, J. P. | M'Callum, John M. | Shaw, Sir Charles E. (Stafford) |
| Glendinning, R. G. | M'Laren, H. D. (Stafford, W.) | Sherwell, Arthur James |
| Glover, Thomas | M'Micking, Major G. | Soares, Ernest J. |
| Goddard, Sir Daniel Ford | Marks, G. Croydon (Launceston) | Stanley, Hon. A. Lyulph (Cheshire) |
| Gooch, George Peabody (Bath) | Masterman, C. F. G. | Steadman, W. C. |
| Gulland, John W. | Menzies, Sir Walter | Stewart-Smith, D. (Kendal) |
| Haldane, Rt. Hon. Richard B. | Micklem, Nathaniel | Taylor, John W. (Durham) |
| Harcourt, Rt. Hon. L. (Rossendale) | Morgan, G. Hay (Cornwall) | Tennant, H. J. (Berwickshire) |
| Harcourt, Robert V. (Montrose) | Morgan, J. Lloyd (Carmarthen) | Thomas, Sir A. (Glamorgan, E.) |
| Hardy, George A. (Suffolk) | Morse, L. L. | Thomas, David Alfred (Merthyr) |
| Harmsworth, Cecil B. (Worcester) | Morton, Alpheus Cleophas | Thomasson, Franklin |
| Harmsworth, R. L. (Caithness-shire) | Murray, James (Aberdeen, E.) | Tomkinson, James |
| Hart-Davies, T. | Napier, T. B. | Toulmin, George |
| Harvey, A. G. C. (Rochdale) | Newnes, F. (Notts, Bassetlaw) | Trevelyan, Charles Philips |
| Harvey, W. E. (Derbyshire, N. E.) | Nussey, Sir Willans | Vivian, Henry |
| Haslam, James (Derbyshire) | Nuttall, Harry | Walker, H. De R. (Leicester) |
| Haslam, Lewis (Monmouth) | O'Brien, Patrick (Kilkenny) | Walsh, Stephen |
| Haworth, Arthur A. | O'Donnell, C. J. (Walworth) | Walters, John Tudor |
| Hedges, A. Paget | Parker, James (Halifax) | Wason, John Cathcart (Orkney) |
| Helme, Norval Watson | Pearce, William (Limehouse) | Waterlow, D. S. |
| Henderson, Arthur (Durham) | Philipps, Col. Ivor (Southampton) | White, Sir George (Norfolk) |
| Henry, Charles S. | Philipps, Owen C. (Pembroke) | White, Sir Luke (York, E. R.) |
| Herbert, T. Arnold (Wycombe) | Pickersgill, Edward Hare | Whitley, John Henry (Halifax) |
| Hobart, Sir Robert | Pollard, Dr. G. H. | Wiles, Thomas |
| Hodge, John | Price, C. E. (Edinburgh, Central) | Wilkie, Alexander |
| Holt, Richard Durning | Priestley, Sir W. E. B. (Bradford, E.) | Williams, J. (Glamorgan) |
| Horniman, Emslie John | Radford, G. H. | Williamson, Sir A. |
| Hyde, Clarendon G. | Raphael, Herbert H. | Wills, Arthur Walters |
| Idris, T. H. W. | Rea, Rt. Hon. Russell (Gloucester) | Wilson, Hon. G. G. (Hull, W.) |
| Jardine. Sir J. | Rea, Walter Russell (Scarborough) | Wilson, J. W. (Worcestershire, N.) |
| Jenkins, J. | Rees, J. D. | Wilson, W. T. (Westhoughton) |
| Johnson, John (Gateshead) | Rendall, Athelstan | |
| Jones, Leif (Appleby) | Richards, Thomas (W. Monmouth) | TELLERS FOR THE NOES.—Mr. Joseph Pease and Sir E. Strachey. |
| Jones, William (Carnarvonshire) | Richards, T. F. (Wolverhampton, W.) |
§ Drafting Amendment made.
§ "But no Reversion Duty shall be charged on the determination of a lease where the owner of the reversion demises the premises included in the lease on the same terms and conditions as are contained in the lease which has determined and without receiving any fine or any other consideration for such demise."
§ This is an Amendment to simplify and, I hope, to save expense in the working of this tax. The case it is intended to cover is that where a new lease is in identical terms with the old lease, and where there is no premium or any consideration of any kind. If an Amendment like this is not inserted, the value of the premises at the time of the granting of the old lease will have to be ascertained, and also the value of the premises when the new lease is granted, because, although the terms of the two leases are the same, there may be a difference of some kind if you capitalise the rent, owing to changes in the 384 value of money. The Amendment would not entail any great sacrifice, and it would simplify matters so much that I think if it were accepted it would be of very great advantage.
§ Sir HENRY KIMBERseconded the Amendment.
§ Mr. LLOYD-GEORGEI really do not know what sort of case the hon. Gentleman has got in his mind. There may be a case where the rent is so heavy that there is no accession of interest to the reversioner at the end of the lease, and the lease is renewed on the same terms; but I must say I have never heard of such a case, and of a landlord renewing a lease at a rent which was only referable to the site, and not to the buildings. That is a kind of case I have never heard of, and it seems to me quite inconceivable. There may be philanthropic landlords of that kind, but I must say they have not come my way.
§ Mr. LLOYD-GEORGEA second renewal of a lease would be a case where the landlord charged rent referable not merely to site, but to buildings as well. When it fell in there would be no value except increment value. There could, in a case of that kind, be no Reversion Duty. The only case where there can be Reversion Duty is one where the rent charged is in respect of the site, and where, when the lease falls in, the reversioner gets not only the site, but also the buildings. If these words were introduced, it would lead to complication instead of simplifying matters. There might be a suggestion that the reversion Duty would be applicable to cases where it is not applicable. I should, therefore, have thought there was no necessity for these words.
§ Mr. JAMES HOPEI speak with great diffidence on this matter, but surely the words of the Clause would apply to the case where the land and the houses on it formed the subject of the lease. When the lease fell in, the landlord, I submit, would be taxed on the whole benefit he might get, even supposing he did not choose to avail himself of that benefit. I am taking the case of land and houses upon it which are the subject of a lease. The lease falls in, and the owner has the power of renewing at an increased rent. Being an affable man, and having some consideration for his tenant, he determines not to avail himself of that benefit. I am taking the same terms as before. He would be taxed, not on the benefit he gets, but on the benefit he might get. In that case surely there would be a strong inducement to extort a rack rent, because whether it was exacted or not the landlord would be taxed on the benefit that might accrue to him. If he chooses to forego it he gets no advantage. He will have to pay just the same. That seems to me to be the construction of these words. Can the Attorney-General justify them or explain them in any other manner? Do they not, as they stand, offer a distinct inducement to the landlord at the termination of the lease to extract the uttermost rent, because, whether he does so or not, he will be taxed upon it?
§ Mr. PRETYMANI have in mind a not uncommon case—one in which there have been poor buildings under the original lease which are not worth maintaining. When the lease falls in the owner will not renew it to the same individual, but he is willing to relet it to some other person at 386 the same ground rent, although the value is much higher, on condition that a better class of building is placed upon it.
§ Mr. LLOYD-GEORGESuch a case as that is not covered by the words of this Amendment. Undoubtedly, in that case, there would be a very substantial consideration to the landlord, for the new tenant might be called upon to spend £10,000 in putting up a better class of building. That would be a very valuable consideration, so far as the landlord is concerned. But that case is not one covered by the Amendment of the hon. Member for Great Yarmouth.
§ Amendment, by leave, withdrawn.
§ Amendments made: Sub-section (2), after the word "value" ["by which the total value"], to insert the words, "as defined for the purpose of the general provisions of this Part of this Act relating to valuation."
§ In the same Sub-section, to leave out the words "of a permanent character" ["executed by the lessor"].—[Sir W. Robson.]
§ Sir W. ROBSONmoved, in the same Sub-section, after the word "executed" ["executed by the lessor"], to insert the words "or expenditure of a capital nature incurred" ["by the lessor"].
Mr. LYULPH STANLEYI should like to ask whether these words cover a case of this nature. I own a house which is let on a yearly tenancy at £200 a year. My tenant asks for a lease and wants me to carry out improvements at an expenditure of £500. He offers to pay an increased rent of £220 if I spend the £500, or to himself carry out the improvements at his own expense on my foregoing a certain portion of the rent. I accept the latter alternative, and agree to accept a reduced rent of £175 a year. At the end of the lease the house is returned to me, and its rental value is £220, the extra £20 being the added value in consequence of the outlay of £500. Now the money has really been spent by me, because I stood out of a certain portion of the rent for a number of years. In calculating the Reversion Duty I imagine the original rent will be put at £175 and the reversion rent at £220, apparently an annual increase of £45. But that increase will be nominal. I do not know whether the Chancellor of the Exchequer has had in mind a case of this nature, and I should be glad to know the view of the Government in regard to it.
§ Sir W. ROBSONI am not quite sure I exactly comprehend the full scope of the case put by my hon. Friend, but, so far as I can gather, I believe it is covered by the words of the Section, which are intended to define the value at the beginning of the lease and that at the end of the lease, and, having compared those two values, assess the duty on the difference between them. It would not be fair, of course, to tax the lessor on any value due to his own expenditure during the currency of the lease. A deduction will be allowed at the time when the tax comes to be assessed in respect of any part of the total value attributable to work executed or to expenditure of a capital nature incurred by the lessor.
Mr. LYULPH STANLEYMay I point out that a subsequent Amendment specifically provides that it shall only apply to cases where a nominal rent only has been reserved?
§ Sir W. ROBSONThat is a different point.
Mr. LYULPH STANLEYNot altogether, because the case I put forward is not one of nominal rent. I think it might be possible, reading the two Amendments together, to define the Section as applying only to cases where a nominal rent has been reserved.
§ Sir W. ROBSONThese words relate to a deduction which is to be made when the tax comes to be imposed. The words introduced with regard to the nominal rent refer to the valuation of the land at the time the lease was made. That is a provision relating to a totally different state of things. If my hon. Friend has improved the value of his hereditament during the currency of the lease, by expenditure of his own, he is in that case entitled to a reduction, when the tax comes to be assessed, in respect of that expenditure.
§ Lord ROBERT CECILI do not think the case is covered by these words, which deal with capital expenditure incurred by a lessor. The case put by the hon. Member for the Eddisbury Division (Mr. Lyulph Stanley) is one in which the lessee incurred the capital expenditure and the lessor, in consequence of that expenditure, was content to accept a lower rent. He, in fact, made an allowance in the rent. In that case the capital expenditure was really incurred by the lessor. Although the Attorney-General may be very confident about it, I must say I think the case put by 388 my hon. Friend, where the expenditure has been made by the lessee, although the burden ultimately falls on the lessor, by reason of a diminution of the rent, is not covered by these words. I think other words are necessary in order to meet this.
§ Sir W. ROBSONThe case put is really a case of expenditure by the landlord. He is invited by the tenant to incur expenditure on the premises, but, instead of doing so, he agrees to allow the tenant to incur the outlay, and accepts a lower rent. I think in that case the expenditure is really incurred by the lessor, and, therefore, the point is covered by these words.
§ Mr. WATSON RUTHERFORDI do not want to intervene in any way between what may be called the domestic difficulty which has arisen between the right hon. Gentleman and one of his supporters behind him, but the point which has been raised is one which comes before us every day where a house is let for some years, and instead of laying out a considerable sum of money on that house the landlord says to the tenant, "I will take considerably less rent if you put it in good repair. I will allow you a year or a year and a half rent." It is frequently done, and although that capital expenditure is really paid out of the pocket of the tenant, it is in fact and in equity a sum of money which the landlord has lost personally, and therefore it ought to be considered as the expenditure of the landlord or lessor. The Government promised to take the point into consideration, and the case is not governed at all by the words which are now proposed to be inserted. I, therefore, think this point is a very important one, and it is not covered by the Amendment of the hon. and learned Gentleman.
§ Sir W. ROBSONIt is better than the old wording. It is only a drafting Amendment, and I do not intend to extend the scope.
§ Amendment made.
§ Drafting Amendment made.
§ Sir W. ROBSONmoved, after the word "lease" ["payments made in consideration of the lease"], to insert the words "(including, in cases where a nominal rent only has been reserved, the value of any covenant or undertaking to erect buildings or to expend any sums upon the property)."
§ Mr. WATSON RUTHERFORDmoved to amend the proposed Amendment by omitting the words "in cases where a nominal rent only has been reserved."
389 I will not repeat the arguments which have already been advanced on this point on proposals which are almost on all fours with the present, but suffice it to say that the Amendment means that the value of any covenant or undertaking to erect buildings clearly ought to be taken into account. If it has any value, then it ought to be taken into account, but the Government put down this Amendment in a shape in which they apply the relief only to cases in which a nominal rent only has been reserved. The application of the Amendment really is that in assessing this Reversion Duty, and making the owner of the property pay 10 per cent. of the value that comes to him at the end of the lease, it is provided that there is to be a deduction in finding out the one value and the other, and for the purpose of making the subtraction, in order to arrive at the value, there is to be taken into account the full value of the building covenant. In all cases where land is leased under a building covenant that building covenant is part of the price and the consideration, and if it has got any value why should it not be so computed and taken into account? The Chancellor of the Exchequer, however, will only take it into account in cases where a nominal rent only has been reserved, and will not take it into account in cases in which more than a nominal amount has been reserved. But what is a nominal rent in regard to one property is a very substantial rent in regard to another. We have been taught that a nominal rent is a peppercorn or a shilling, and does this mean a sum of money which is not to be collected at all, or what sum does it mean? Has anybody ever looked at a building lease in their lives without coming to the conclusion that every part of what the lessee has to do under the lease is part of the consideration or price? Of course it is. If there are costs to pay that is part of the price. If there is a line on renewal, that is part of the price and also the rent, and you have to capitalise the rent under this Bill to find out what part of the price is. But I contend, without fear of the statement being criticised by any surveyor or anyone who knows anything about real estate at all, that a building covenant is a part of the consideration for the lease. It is part of the price. Under these circumstances, why does the Government say it is only part of the price when there is a nominal rent? When there is a nominal rent it is practically the whole price, but it is just as much a part of the price, how- 390 ever big the rent may be. Why should not that be taken into account as well as any other part of the price that is included in the document? For that reason I move to leave out these restraining words in cases where there is a nominal rent only, because they have an effect tantamount to stating that a building lease is not part of the price in cases where there is more than a nominal rent. That statement is absolutely unfounded in fact, and it is unjust and unfair to repeat it in an Amendment of this kind.
§ Sir SAMUEL SCOTTseconded the Amendment to the proposed Amendment.
§ Mr. LLOYD-GEORGEWe had a discussion on this subject, and I have nothing to add to what I said then. As a matter of fact, although a covenant to build is part of the nominal consideration, it really is only a nominal consideration. There are cases where the rent which is exacted is as a rule a rack rent—the largest rent that the landlord can exact. As a rule it is 10 or 15 times the agricultural value of the land. There is a covenant to build in each of these cases. It is not a real part of the consideration, but it is always inserted in the lease, and if these words are left out there will hardly be any revenue at all. It will only be 10 per cent. Increment Duty instead of 10 per cent. Reversion Duty, and for that reason I could not accept the Amendment.
§ Mr. AUSTEN CHAMBERLAINThe observation of the Chancellor of the Exchequer is the condemnation of his own tax. It destroys the whole basis on which the tax rests. There is no windfall here after the Chancellor's declaration. There is no unexpected advantage. What he is taxing is something that the man covenanted for, which was part of the bargain, and the Chancellor says unless he is allowed to tax that he will get no revenue whatever. I am quite content to leave the tax as explained by the Chancellor. For my part I shall vote against it for the reasons given by the Chancellor of the Exchequer without adding another word to the Debate.
Mr. LYULPH STANLEYThe speech that the right hon. Gentleman delivered ten minutes ago rather contradicts what he has just now said. The covenant to erect buildings is a merely nominal consideration. We were previously discussing the case of where the lease is renewed on the same terms as regards rent, but with a covenant to erect buildings worth 391 £20,000. The Chancellor of the Exchequer said that is a very valuable consideration. Of course the rent reserved for a 999 years' lease is greater than in the case of a 99 years' lease. The only reason for that is that there is a value attaching to the buildings which are to be erected. I cannot see the justification for ignoring that value, and I feel obliged to support the Amendment and to vote against the Government.
§ 10.0 P.M.
§ Lord ROBERT CECILI am amazed at the attitude of the Government to the Amendment. It is incredible that anyone could make the kind of speech that the Chancellor of the Exchequer has made. The Amendment says that where a nominal rent is reserved, certain deductions ought to be made in respect of covenants entered into at the beginning of the lease. He says that ought to be done where the nominal rent has been reserved. Why on earth should not it be done when any other than the nominal rent is reserved? What conceivable argument can there be? He says these covenants are of no value at all. Then why make the allowance for them when the nominal rent is reserved. What is the sense of it? There really is no sense. I really cannot understand how the Chancellor of the Exchequer can defend the Amendment as it stands. He has not defended it. We are not now asking as to whether there ought to be an allowance in respect of these covenants at all, but whether, granted that there ought to be an allowance when a nominal rent has
§ been reserved, there ought not to be also an allowance when other than a nominal rent is reserved. Of course, the Chancellor of the Exchequer is quite wrong when he says these covenants are not worth anything, and that the landlord exacts the same rent, whether the covenants are put in or not. As a matter of fact, if the landlord desires to insert an onerous building covenant, he gets less rent. Does the Chancellor of the Exchequer seriously maintain that a landowner would go to a builder and say, "I propose to put upon you a very onerous covenant, and to ask you £100 ground rent, and I also propose an alternative form of lease in which there will be no onerous covenant, but I should not think of asking you more than £100 rent in spite of that fact." They would have him shut up as a lunatic immediately. The thing appears grotesque. It is true that if he has a very long lease all the covenants at the beginning of the lease are of comparatively little value in money at the end of the lease, and if the lease is long enough they will be of no value at all. That is the ordinary doctrine of present value and the discount of money. But they have some value, and this Reversion Duty refers not only to leases of 80 or 50 years, but to all leases over 21 years, and to say that an onerous covenant, even if accompanied by a substantial rent, is of no value in a lease of 22 years really is asking the House of Commons to believe something which is on the face of it incredible.
§ Question put, "That the words proposed to be left out stand part of the proposed Amendment."
§ The House divided: Ayes, 181; Noes, 64.
393| Division No. 817.] | AYES. | [10.5 p.m. |
| Agar-Robertes, Hon. T. C. R. | Buckmaster, Stanley O. | Esslemont, George Birnie |
| Allen, A. Acland (Christchurch) | Burns, Rt. Hon. John | Evans, Sir S. T. |
| Allen, Charles P. (Stroud) | Burt, Rt. Hon. Thomas | Everett, R. Lacey |
| Astbury, John Meir | Byles, William Pollard | Falconer, J. |
| Balfour, Robert (Lanark) | Cameron, Robert | Fenwick, Charles |
| Baring, Godfrey (Isle of Wight) | Cawley, Sir Frederick | Fiennes, Hon. Eustace |
| Barker, Sir John | Channing, Sir Francis Allston | Freeman-Thomas, Freeman |
| Barlow, Sir John E. (Somerset) | Cherry, Rt. Hon. R. R. | Fullerton, Hugh |
| Barry, Redmond J. (Tyrone, N.) | Clough, William | Gibson, J. P. |
| Beale, W. P. | Cobbold, Felix Thornley | Glendinning, R. G. |
| Beauchamp, E. | Collins, Sir Wm. J. (St. Pancras, W.) | Glover, Thomas |
| Bell, Richard | Corbett, A. Cameron (Glasgow) | Goddard, Sir Daniel Ford |
| Belloc, Hilaire Joseph Peter R. | Corbett, C. H. (Sussex, E. Grinstead) | Gooch, George Peabody (Bath) |
| Benn, W. (Tower Hamlets, St. Geo.) | Cotton, Sir H. J. S. | Greenwood, G. (Peterborough) |
| Bennett, E. N. | Dalziel, Sir James Henry | Gulland, John W. |
| Berridge, T. H. D. | Davies, Sir W. Howell (Bristol, S.) | Haldane, Rt. Hon. Richard B. |
| Black, Arthur W. | Dickinson, W. H. (St. Pancras, N.) | Harcourt, Rt. Hon. L. (Rossendale) |
| Brace, William | Duckworth, Sir James | Harcourt, Robert V. (Montrose) |
| Brigg, John | Dunn, A. Edward (Camborne) | Hardy, George A. (Suffolk) |
| Brodie, H. C. | Edwards, A. Clement (Denbigh) | Harmsworth, Cecil B. (Worcester) |
| Brooke, Stopford | Edwards, Sir Francis (Radnor) | Harmsworth, R. L. (Caithness-shire) |
| Brunner, J. F. L. (Lancs., Leigh) | Elibank, Master of | Harvey, A. G. C. Rochdale) |
| Brunner, Rt. Hon. Sir J. T. (Cheshire) | Erskine, David C. | Harvey, W. E. (Derbyshire, N. E.) |
| Bryce, J. Annan | Essex, R. W. | Haslam, James (Derbyshire) |
| Haslam, Lewis (Monmouth) | Masterman, C. F. G. | Schwann, Sir C. E. (Manchester) |
| Haworth, Arthur A. | Micklem, Nathaniel | Shackleton, David James |
| Hedges, A. Paget | Molteno, Percy Alport | Shaw, Sir Charles E. (Stafford) |
| Helme, Norval Watson | Morgan, G. Hay (Cornwall) | Silcock, Thomas Ball |
| Henderson, Arthur (Durham) | Morgan, J. Lloyd (Carmarthen) | Simon, John Allsebrook |
| Henderson, J. McD. (Aberdeen, W.) | Morse, L. L. | Soares, Ernest J. |
| Henry, Charles S. | Morton, Alpheus Cleophas | Stewart-Smith, D. (Kendal) |
| Hobart, Sir Robert | Myer, Horatio | Taylor, John W. (Durham) |
| Hodge, John | Napier, T. B. | Tennant, H. J. (Berwickshire) |
| Holland, Sir William Henry | Nolan, Joseph | Thomas, Sir A. (Glamorgan, E.) |
| Holt, Richard Durning | Nussey, Sir Wallans | Thomas, David Alfred (Merthyr) |
| Horniman, Emslie John | Nuttall, Harry | Thomasson, Franklin |
| Hyde, Clarendon G. | O'Brien, Patrick (Kilkenny) | Tomkinson, James |
| Idris, T. H. W. | O'Connor, John (Kildare, N.) | Toulmin, George |
| Isaacs, Rufus Daniel | O'Donnell, C. J. (Walworth) | Trevelyan, Charles Philips |
| Jardine, Sir J. | Parker, James (Halifax) | Verney, F. W. |
| Jenkins, J. | Philipps, Col. Ivor (Southampton) | Vivian, Henry |
| Johnson, John (Gateshead) | Philipps, Owen C. (Pembroke) | Walsh, Stephen |
| Jones, Leif (Appleby) | Pickersgill, Edward Hare | Walters, John Tudor |
| Jones, William (Carnarvonshire) | Pollard, Dr. G. H. | Warner, Thomas Courtenay T. |
| Keating, M. | Price, C. E. (Edinburgh, Central) | Wason, John Cathcart (Orkney) |
| Kelley, George D. | Price, Sir Robert J. (Norfolk, E.) | Waterlow, D. S. |
| King, Alfred John (Knutsford) | Radford, G. H. | White, Sir George (Norfolk) |
| Lamb, Ernest H. (Rochester) | Raphael, Herbert H. | White, Sir Luke (York, E. R.) |
| Layland-Barratt, Sir Francis | Rea, Rt. Hon. Russell (Gloucester) | Whitley, John Henry (Halifax) |
| Lever, A. Levy (Essex, Harwich) | Rea, Walter Russell (Scarborough) | Wiles, Thomas |
| Lewis, John Herbert | Rees, J. D. | Wilkie, Alexander |
| Lloyd-George, Rt. Hon. David | Rendall, Athelstan | Williams, J. (Glamorgan) |
| Luttrell, Hugh Fownes | Richards, Thomas (W. Monmouth) | Williamson, Sir A. |
| Lynch, H. B. | Richards, T. F. (Wolverhampton, W.) | Wilson, Hon. G. G. (Hull, W.) |
| Macdonald, J. M. (Falkirk Burghs) | Roberts, Charles H. (Lincoln) | Wilson, Henry J. (York, W. R.) |
| Maclean, Donald | Roberts, Sir J. H. (Denbighs) | Wilson, J. W. (Worcestershire, N.) |
| Macpherson, J. T. | Robinson, S. | Wilson, W. T. (Westhoughton) |
| MacVeagh, Jeremiah (Down, S.) | Robson, Sir William Snowdon | |
| M'Callum, John M. | Roch, Walter F. (Pembroke) | |
| M'Laren, H. D. (Stafford, W.) | Roe, Sir Thomas | TELLERS FOR THE AYES.—Mr. Joseph Pease and Sir E. Strachey. |
| M'Micking, Major G. | Russell, Rt. Hon. T. W. | |
| Marks, G. Croydon (Launceston) | Samuel, Rt. Hon. H. L. (Cleveland) | |
| NOES. | ||
| Acland-Hood, Rt. Hon. Sir Alex. F. | Gardner, Ernest | Rawlinson, John Frederick Peel |
| Arkwright, John Stanhope | Gibbs, G. A. (Bristol, West) | Renwick, George |
| Balcarres, Lord | Gordon, J. | Ridsdale, E. A. |
| Banbury, Sir Frederick George | Goulding, Edward Alfred | Ronaldshay, Earl of |
| Baring, Capt. Hon. G. (Winchester) | Gretton, John | Salter, Arthur Clavell |
| Beckett, Hon. Gervase | Hamilton, Marquess of | Smith, Abel H. (Hertford, East) |
| Bellairs, Carlyon | Hardy, Laurence (Kent, Ashford) | Smith, F. E. (Liverpool, Walton) |
| Bowles, G. Stewart | Hope, James Fitzalan (Sheffield) | Smith, Hon. W. F. D. (Strand) |
| Bull, Sir William James | Hunt, Rowland | Stanier, Beville |
| Burdett-Coutts, W. | Kerry, Earl of | Stanley, Hon. A. Lyulph (Cheshire) |
| Carlile, E. Hildred | Lee, Arthur H. (Hants, Fareham) | Starkey, John R. |
| Castlereagh, Viscount | Long, Col. Charles W. (Evesham) | Talbot, Lord E. (Chichester) |
| Cecil, Evelyn (Aston Manor) | Lowe, Sir Francis William | Valentia, Viscount |
| Cecil, Lord R. (Marylebone, E.) | M'Arthur, Charles | Walker, Col. W. H. (Lancashire) |
| Chamberlain, Rt. Hon. J. A. (Worc'r.) | Magnus, Sir Philip | Walrond, Hon. Lionel |
| Coates, Major E. F. (Lewisham) | Morpeth, Viscount | Williams, Col. R. (Dorset, W.) |
| Coates, Major E. F. (Lewisham) | Morpeth, Viscount | Williams, Col. R. (Dorset, W.) |
| Craig, Capt. James (Down, E.) | Morrison-Bell, Captain | Younger, George |
| Douglas, Rt. Hon. A. Akers- | Nicholson, Wm. G. (Petersfield) | |
| Faber, George Denison (York) | Peel, Hon. W. R. W. | |
| Fell, Arthur | Powell, Sir Francis Sharp | TELLERS FOR THE NOES.—Mr. Watson Rutherford and Sit Samuel Scott. |
| Fletcher, J. S. | Pretyman, E. G. | |
| Forster, Henry William | Randles, Sir John Scurrah | |
| Foster, P. S. | Ratcliff, Major R. F. |
Question, "That those words be there inserted," put, and agreed to.
§ Proposed words there inserted in the Bill.
§ Amendment made: After the word "lease," to insert the words "(including, in cases where a nominal rent only has been reserved, the value of any covenant or undertaking to erect buildings or to expend any sums upon the property.)"
§ Drafting Amendments also made.
§ Mr. PRETYMANI beg to move, at the end of Sub-section (2), to insert the words 394
and where at any time during the continuance of the lease a lessee has had an option of purchasing the lessor's interest the value of the benefit accruing to the lessor shall not be deemed to be greater than the amount by which the purchase money fixed under the option exceeds the value of the consideration for the original grant of the lease.I do not know whether the Government have considered this since the Committee stage, but it really is a most reasonable 395 Amendment. It is not at all an uncommon case for the lessee to prefer taking the lease himself where he has the option. It is quite common for the lessee to have the option of acquiring the freehold at the determination of the lease on certain terms, and it would be only reasonable that where the freehold is not so acquired these terms, on which it could have been acquired, shall be the subject of comparison. There can be no reason for penalising the lessor for a matter for which the lessee is responsible. Where the lessor insists upon taking the freehold, and refuses to give the lessee the option of acquiring it, the grounds upon which this tax is advocated may have some bearing, tout where he has given such option and it has not been exercised they have no bearing on it at all. This Amendment is so reasonable that I cannot think the Government will refuse it.
§ Sir W. ROBSONI can scarcely accept the hon. Gentleman's statement of the grounds on which this tax is advocated. I think that those grounds are now quite well appreciated by the House and by the country. Where the lessor derives some considerable and substantial benefit on the determination of the lease not due to any expenditure by him during the currency of the lease, that benefit seems to be a fit subject of contribution towards the needs of the State. That is, broadly speaking, the ground on which this tax is based. It has no relation whatever to the proposal made now. The hon. Gentleman says that where the lessor has given the lessee the option of purchase the measure of benefit to the lessor is not to be taken, as it is in this Bill, as the difference between the value at the time of the granting of the lease and the value at the expiration of the lease, but that a different measure should be adopted, namely, the difference between the value at the time of the granting of the lease and the amount of the purchase money fixed by the option. That is a matter that is totally irrelevant. The fact that he has chosen to give an option to purchase and that the lessee has chosen not to exercise it does not in any way affect the basis on which this tax is to be assessed. The two matters are totally incomparable, and there is no reason at all why the option should make any difference in the method of assessment.
§ Amendment negatived.