HC Deb 06 August 1912 vol 41 cc3123-9

Notwithstanding anything in Section two of the Finance (1909–10) Act, 1910, in the case of land which on the thirtieth day of April, nineteen hundred and nine, was used bonâ fide for agricultural purposes and the value for such purposes then exceeded the original site value, the increment value of such 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 is to be collected as ascertained in accordance with Section two of the said Act exceeds on such occasion the value of the land for agricultural purposes.

Motion made, and Question proposed, "That the Clause be read a second time."


I will propose this Clause very shortly, although there is a good deal to be said upon it. [Interruption.] If hon. Gentlemen below the Gangway will not make any of those sounds I shall finish all the sooner. [Interruption.] The Increment Value Duty is levied on the difference between the value of the site on the original occasion when it was valued and the occasion when the duty comes to be levied. The duty falls very heavily on agricultural land which is rising into building land, and the object of the Amendment is to provide that in the case of agricultural land which on the 30th day of April, 1909, had a higher agricultural value than the assessable site value, the increment value shall be the amount by which site value on the occasion when the duty collected exceeds the value of the land for agricultural purposes. [Interruption.] It is liable to be heavily taxed by reason of the fact that it comes into the market as building land, and the tax is assessed not on the difference between the original value as building land and the present value as building land, but upon the original value of the land for agricultural purposes compared with its new value for building purposes.

I will give an illustration. Take a farm worth £l,500. The site value of that farm is £l,000. That farm if placed in the category of building land has a site value of £2,000. The Increment Duty is charged not on the difference between £1,500 and £2,000, but on the difference between £1,000 and £2,000. That tax may be charged upon £500 extra value which may be due merely to the efforts of the owner of the land to improve the land, and in that case it is a rent charge upon improvements. It was stated by the Chancellor of the Exchequer that no part of the Increment Taxes would fall upon improvements due to the skill and foresight of the owners of land. [Interruption.]

Mr. DEPUTY-SPEAKER (Mr. Whitley)

Members below the Gangway should keep quiet whilst the hon. Member is speaking. It will conduce to the more speedy dispatch of business if hon. Members will refrain from interruptions.


The charge is levied, not upon values due to the acts of the community, but is directly levied upon value due to action of the owner himself. It is true that when the change took place agricultural land was converted into building land, but a large portion of the value as agricultural land disappears and is not replaced. [Interruption.]


I hear hon. Members below the Gangway addressing one another. Any matter of order must be dealt with by the Chair.


From the point of view of the owner of the land all that has really happened is that a certain agricultural value as it were has been converted into a building value, and my contention is, and the argument in this Clause is, that we only lay the charge on the difference between the site value for building purposes and the full value of the agricultural land. It is matter of common knowledge that there is a great deal of land in the neighbourhood of towns which is in this double position, that it is and is not building land at the same time. Moreover, a great deal of peculiar hardship falls on agricultural land because this building land owes a great deal of its value to the fact that it can be let during the interval for agricultural land. Land worth, say, £100 an acre is let for £4 an acre. Because there is a speculative building value in it which may not be realised, or which may increase and be realised, a man is ready to give £150 an acre for it, as he knows that while waiting for that possibility he is getting 2½ per cent, on the £150, so that the mere fact of there being agricultural value there gives value to the building land. For that reason it is exceedingly hard to charge this man on the agricultural value when he ought to be charged entirely on the building value. I hope the Attorney-General will give the concession asked for and will confine the tax, as it ought to be confined, solely to that portion of the value which represents what he says is the gain to the community, which is arrived at by deducting the full agricultural value from the site value of the building land as it is ascertained on the occasion.


I beg to second the new Clause, and in doing so I make only one observation—that in the case of undeveloped land duty at the present time that is only charged on the difference between agricultural value and building value, and the new Clause only asks that the same arrangement should be made with regard to Increment Value Duty, namely, that it should be charged on the difference between the agricultural value and the building value, as was conceded in the 1909–10 Budget in the case of Undeveloped Land Duty. I do not know why it should not be conceded in this case as well. I see no reason for the distinction. I remember when I first came to this House, in the Spring of 1910, there was a discussion on Clause 7, under which this Increment Value Duty is not charged on agricultural land, while it has no higher value than its value for agricultural purposes, and the argument seemed to turn on the suggestion that no improvements in agricultural value were being taxed. The House did not seem to realise that under this Clause agricultural values as they existed at the date of the passing of the Act were being actually taxed. It is not that an improvement in the land for agricultural purposes since the date of the passing of the Act has been only taxed, but it is the fact that the whole of the agricultural value, as on 30th April, 1909, except such part as is attributable to site value, is actually taxed under this Clause. It is impossible then for the Government to say that a very considerable tax is not being placed on agricultural land under the present arrangement. I respectfully suggest that the same conditions be made to apply to Increment Value Duty now, and that the duty should only be payable on the difference between the agricultural value and the building value.


I am afraid this is not the first time we have discussed this point. When the Budget was passing through Committee of this House it was discussed again and again. I quite appreciate the point of the hon. Member who moved the Clause, but it raises a question which really goes to the root of the Amendment we have discussed. So far as we on this side are concerned, our contention has always been, and is now, that what we are taxing is building increment. We are taxing the value at which the land can be sold, and consequently we have to take into account whatever that value may be. We have justified it more than once, and I am afraid if we argued it for many days more we should

not come any nearer to agreement. We have said what are our views with regard to it, and I am sure I could not satisfy the hon. Gentleman who moved this Clause if I were to discuss it at great length. All I can say with regard to it is that it is within the principle which we have asserted from the beginning, namely, that what we are taxing is the building increment. I regret, therefore, I cannot accept the new Clause.


It is really no answer to my hon. Friend to say that what the Government are seeking to tax is building increment and building increment only. The hon. Member for Taunton (Mr. Peel) has pointed out that, although that may be their intention, the result is that they are taxing a great deal more than the mere building increment, and this Clause is designed, and I think accurately designed, to put into terms what are the aims and ambitions of the Attorney-General, namely, to tax building increment only. The Attorney-General said he has justified the Government's position by many speeches made when the Act was passing. He may claim to have attempted to justify it, but I submit he has not justified it, and his admission that his intention is to tax building increment only, is an admission that the position has not been justified. Although we have had a short opportunity, and not a very happy opportunity to-night, because my hon. Friend had great difficulty in presenting his argument fairly to the House, I hope he will proceed to a division in order that we may-record our protest.

Question put, "That the Clause be react a second time."

The House divided: Ayes, 65; Noes, 156.

Division No. 211.] AYES. [1.50 a.m.
Agg-Gardner, James Tynte Gibbs, George Abraham Pryce-Jones, Col. Edward
Archer-Shee, Major Martin Glazebrook, Philip K. Roberts, S. (Sheffield, Ecclesall)
Ashley, Wilfrid W. Goldsmith, Frank Ronaldshay, Earl of
Baird, John Lawrence Grant, James Augustus Royds, Edmund
Baker, Sir Randoll L. (Dorset, N.) Gretton, John Rutherford, Watson (Liverpool)
Balcarres, Lord Gwynne, R. S. (Sussex, Eastbourne) Sanders, Robert Arthur
Banbury, Sir Frederick George Henderson, Major H. (Berkshire) Stanier, Beville
Barlow, Montague (Salford, S.) Hill, Sir Clement L. (Shrewsbury) Starkey, John Ralph
Barnston, Harry Hope, James Fitzalan (Sheffield) Staveley-Hill, Henry
Bathurst, Charles (Wilts, Wilton) Joynson-Hicks, William Talbot, Lord E.
Beach, Hon. Michael Hugh Hicks Kerry, Earl of Thynne, Lord Alexander
Benn, Arthur Shirley (Plymouth) Kyffin-Taylor, Gerald Touche, George Alexander
Bennett-Goldney, Francis Lewisham, Viscount Walrond, Hon. Lionel
Boles, Lieut-Col. Dennis F. Locker-Lampson, G. (Salisbury) Wheler, Granville C. H.
Boyton, James Macmaster, Donald White, Maj. G. D. (Lanes., Southport)
Bridgeman, William Clive Malcolm, Ian Willoughby, Major Hon. Claud
Burn, Col. Charles Rosdew Mills, Hon. Charles Thomas Winterton, Earl
Cassel, Fellx Morrison-Bell, Major A. (Honiton) Worthington-Evans, Laming
Cecil, Lord Hugh (Oxford Univ.) Neville, Reginald J. Neville Younger, Sir George
Chamberlain, Rt. Hon. J. A. (Worc'r.) Newdegate, F. A.
Chambers, James Newman, John R. P. TELLERS FOR THE AYES.—Mr.
Clive, Captain Percy Archer Newton, Harry Kottingham William Peel and Mr. Pollock.
Eyres-Monsell, Bolton M. Peto, Basil Edward
Abraham, William (Dublin Harbour) Havelock-Allan, Sir Henry O'Grady, James
Acland, Francis Dyke Hayden, John Patrick O'Kelly, E. P. (Wicklow, W.)
Adamson, William Henderson, Arthur (Durham) O'Malley, William
Armitage, Robert Henry, Sir Charles S. O'Neill, Dr. Charles (Armagh, S.)
Baker, Harold T. (Accrlngton) Higham, John Sharp O'Shaughnessy, P. J.
Barnes, George N. Hobhouse, Rt. Hon. Charles E. H. O'Shee, James John
Bentham, George Jackson Hogge, James Myles O'Sullivan, Timothy
Boland, John Plus Hudson, Walter Outhwaite, Robert Leonard
Booth, Frederick Handel Hughes, Spencer Leigh Parker, James (Halifax)
Bowerman, Charles W. Illlngworth, Percy H. Phillips, John (Longford, S.)
Boyle, Daniel (Mayo, North) Isaacs, Rt. Hon. Sir Rufus Pointer, Joseph
Brady, Patrick Joseph John Edward Thomas Ponsonby, A. W. H.
Burke, E. Haviland- Jones, Edgar R. (Merthyr Tydvil) Power, Patrick Joseph
Burns, Rt. Hon. John Jones, Henry Haydn (Merioneth) Price, C. E. (Edinburgh, Central)
Byles, Sir William Pollard Jones, William (Carnarvonshire) Price, Sir Robert J. (Norfolk, E.)
Carr-Gomm, H. W. Jowett, Frederick William Primrose, Hon. Neil James
Clancy, John Joseph Joyce, Michael Pringle, William M. R.
Clough, William Keating, Matthew Raffan, Peter Wilson
Clynes, John R. Kellaway, Frederick George Rea, Rt. Hon. Russell (S. Shields)
Condon, Thomas Joseph Kilbride, Denis Reddy, Michael
Cory, Sir Clifford John King, Joseph Redmond, John E. (Waterford)
Cotton, William Francis Lambert, Rt. Hon. G. (Devon,S.Molton) Redmond, William (Clare, E.)
Crumley, Patrick Lambert, Richard (Wilts, Cricklade) Richards, Thomas
Cullinan, John Lardner, James C. R. Roberts, Charles H. (Lincoln)
Dawes, James Arthur Law, Hugh Alex. (Donegal, W.) Roberts, George H. (Norwich)
Delany, William Lewis, John Herbert Robertson, John M. (Tyneside)
Denman, Hon. Richard Douglas Lundon, Thomas Roche, Augustine (Louth, N.)
Devlin, Joseph Lynch, Arthur Alfred Rowlands, James
Dillon, John Macdonald, J. R. (Leicester) Scanlan, Thomas
Donelan, Captain A. Macdonald, J. M. (Falkirk Burghs) Seely, Rt. Hon. Colonel
Duffy, William J. Macnamara, Rt. Hen. Dr. T. J. Sheehy, David
Duncan, C. (Barrow-ln-Fumess) MacNeill, J. G. S. (Donegal, S.) Shortt, Edward
Duncan, J. Hastings (York, Otley) Macpherson, James Ian Simon, Sir John Allsebrook
Elibank, Rt. Hon. Master of MacVeagh, Jeremiah Smith, Albert (Lanes., Clitheroe)
Esmonde, Dr. J. (Tipperary, N.) McKenna, Rt. Hon. Reginald Smyth, Thomas F. (Leitrlm, S.)
Esmonde, Sir T. (Wexford, N.) Markham, Sir Arthur Basil Stanley, Albert (Staffs, N.W.)
Farrell, James Patrick Marks, Sir George Croydon Sutton, John E.
Ffrench, Peter Marshall, Arthur Harold Taylor, John W. (Durham)
Field, William Mason, David M. (Coventry) Tennant, Harold John
Flennes, Hon. Eustace Edward Masterman, Rt. Hon. C. F. G. Thorne, G. R. (Wolverhampton)
Flavin, Michael Joseph Meehan, Francis E. (Leitrlm, N.) Trevelyan, Charles Philips
George, Rt. Hon. David Lloyd Molloy, Michael Tire, Rt. Hon. Alexander
Gill, Alfred Henry Mooney, John J. Wadsworth, John
Greenwood, Granville G. (Peterborough) Morison, Hector Ward, John (Stoke-upon-Trent)
Greig, Colonel James William Muldoon, John Webb, Henry
Grey, Rt. Hon. Sir Edward Munro, Robert Wedgwood, Joslah C.
Gulland, John William Murray, Capt. Hon. Arthur C. White, James Dundas (Glasgow)
Hackett, John Nannettl, Joseph P. White, Patrick (Meath, North)
Hancock, John George Nolan, Joseph Wilkle, Alexander
Harcourt, Robert V. (Montrose) O'Brien, Patrick (Kilkenny) Wilson, W. T. (Westhoughton)
Harmsworth, C. B. (Beds, Luton) O'Connor, John (Kildare, N.) TELLERS FOR THE NOES.—Mr.
Harvey, T. E. (Leeds, West) O'Doherty, Philip Wedgwood Benn and Mr. Geoffrey Howard.
Harvey, W. E. (Derbyshire, N.E.) O'Donnell Thomas