§ It is hereby declared that, for the purposes of Section 27, Sub-section (2). of the Finance (1909–10) Act, 1910, the words "the first claim for Increment Value Duty or Undeveloped Land Duty" shall be inserted in place of the words "the copy of the provisional valuation," and this Section shall be amended accordingly.
§ Motion made and Question proposed, "That the Clause be read a second time."
§ Mr. ROYDSIn moving this Clause, I have to apologise for asking the House to deal with the comparatively dry subject of valuation. Under Section 27 of the Finance Act of 1910 objections to provisional valuations may be sent in after sixteen days from the service of the valuation. By Section 33 an appeal cannot be if an objection is not sent in at the time. The object of my Amendment is to extend the time within which objections may be sent in up to the assessment of the owner of the land. Nine-tenths of the land of this country consists of agricultural land, and nine-tenths of the objections which are made to provisional valuations are objections in respect to the site value of land, not market value, which is comparatively easy to ascertain. The objections to site values are in the main, objections to the refusal of the Commissioners to give credit for improvements in the nature of drainage, embankments, stone walls, dock works, reclamation, and so forth. If owners of agricultural land make this objection, they are met with the answer from the Inland Revenue that this objection cannot under any circumstances be entertained by reason of the construction placed upon the provisions of the Finance Act of 1910. The fact is that the whole of the agricultural land of this country is being valued as regards site value without any reference to the deductions for improvements made by the owners or their predecessors. In other words, totally false site values, fictitious values for agricultural land in this country are now being ascertained. I think under these circumstances there is no justification whatever for Parliament allowing this expenditure of money to ascertain a false site value.
3109 The object of the Finance Act as regards the Valuation Clauses was to ascertain the true market value and the true site value. I do not suggest that true market value is not ascertained, but I do say that the true site value of nine-tenths of the land of the country is not ascertained under the present conditions, as interpreted by the Government and the Commissioners of Inland Revenue. I should like to put a plain question to the Chancellor of the Exchequer. Does he think that under present conditions the owners of land which is agricultural have no right to have credit for any improvements of the nature I have mentioned? Does he not think that unless that is done, it is not possible to ascertain the true site value of agricultural land? If he does not, what justification is there for the valuation proceeding until the law is amended? The improvements which are not allowed, are improvements of a nature which have themselves created the agricultural land or created the industry which is carried on upon the land. I have read through the Debates of 1909 when this question of deductions was considered. I tried to find out how it was that Clause 25 of the Finance Act came to be framed in this way. One feature stands out perfectly clearly in those discussions, namely, that hon. Members on both sides of the House, and hon. Members on the Irish Benches interested in agriculture, moved Amendments after Amendments in order to make sure that these deductions should be allowed, and that the true site value of agricultural land should be ascertained, and the Chancellor of the Exchequer over and over again assured the House that under the Amendment which he introduced at the end of Clause 25 those allowances were right.
§ Mr. LLOYD GEORGEThe hon. Gentleman seems to me to be raising quite a different issue. This is a very narrow issue. It is the question of whether there should be an extension of time for the provisional valuation until the occasion arises, but the hon. Gentleman is raising the whole question of deductions upon agricultural land, and the merits of the Budget upon that subject. That has nothing to do with the question of the extension of time for the provisional valuation.
§ Mr. SPEAKERI think that is so. I have just been looking up the Section and cannot follow the hon. Gentleman. The title of his own new Clause is: "Extension 3110 of time for objection to provisional valuation." The hon. Gentleman must confine his remarks to that.
§ Mr. ROYDSMy object is this. At the present time in the case of owners of agricultural land site values are being inaccurately ascertained. The reason they have been inaccurately ascertained is because they are not allowed these deductions. The object of this Clause is to enable owners of agricultural land to formulate their objections later on, and until these objections are formulated no final valuation of agricultural land can therefore be made. I think it is the only course that I could suggest should be pursued under the circumstances. I venture to think I am perfectly in order. I am giving the reasons why further time should be given for agricultural owners to formulate their objections.
§ Mr. SPEAKERThe hon. Member was not confining himself to that. On the assumption that the deductions are improperly made the hon. Member is entitled to found the argument that owners ought to have more time. That would be strictly relevant.
§ Mr. ROYDSIn order to argue that owners of land should have more time, I thought it only right that I should show the House that when these Clauses were under discussion the Chancellor of the Exchequer assured the House that owners of agricultural land would have time to make these objections, and that they would have every opportunity of making them. I was anxious to show, therefore, that, on the construction of the Finance Act as taken by the Government, they were not able at the present time to make their objections. In that connection I would like to mention in particular a discussion which comes to the point at, once. It took place on 12th August, 1909. The Chancellor of the Exchequer, in reply to the right hon. Gentleman, the then Leader of the Opposition, said:—
What the right hon. Gentleman, the Leader of the Opposition, wants, is this: that where a landlord has spent money for the purpose of improving the land, very often creating land for either agricultural or building purposes, he should get full credit, not merely for expenditure, but for the value created thereby.
§ Mr. SPEAKERThe hon. Member is again arguing the point as to how the site value is to be fixed. That is not raised by this Clause at all. The only question raised now is whether the landowner has or has not got sufficient time to state his objection. If the hon. Mem- 3111 ber can show that the owner has not sufficient time, he can produce some arguments.
§ Mr. ROYDSWhat I am endeavouring to show is that the landowner at the present time is not able to state his objections at all. It is not only that he has not time, but he is absolutely precluded from making them under any circumstances whatever. That is the construction placed on the Section by the Government.
§ Mr. SPEAKERIf an extension of time is desired the owner must have some ground for wishing the extension.
§ Mr. ROYDSThe Finance Act of course says that owners of land, if they wish to formulate objections, must make those objections within 60 days after the provisional valuation has been served, but when the owners of agricultural land make those objection within the 60 days they are met with the answer from the Government that the objections cannot be considered because they are not authorised to be considered by the Finance Act of 1910. I therefore ask for an extension of time so that the law may be amended before any final valuation is made of agricultural land as regards site value. The Chancellor of the Exchequer smiles, but I think it is a most serious subject, and I shall ask him to deal with it seriously. This seems to me to be the only form in which I can raise the question. If I cannot raise it in this way, false values of agricultural land must be recorded in the Chancellor of the Exchequer's Domesday Book, and I am quite sure the right hon. Gentleman, when he rises in his place, will not be able to tell me that even in his opinion it is possible under the present conditions to arrive at the true site value of agricultural land when no allowance whatever is made for the improvements as he promised.
§ Mr. SPEAKERI must again point out that that is not the question.
§ Mr. ROYDSI do not know that under the circumstances I can say any more. [HON. MEMBERS: "Hear, hear."] I know it is exceedingly disagreeable to hon. Members to have this fact disclosed, but I am very glad of the opportunity of discussing it before we separate. I think it is an absolute scandal that this valuation should be allowed to proceed on the present basis.
§ Mr. HICKS BEACHI beg to second this new Clause, and I do so on a slightly different ground from that of my hon. Friend. I wish to have an extension of time given during which objection may be made to provisional valuation, chiefly on account of small owners of property. A great many small owners have had this provisional valuation made upon their property, and when they received it they had not the least idea what it really meant, and they did not begin to realise that this provisional valuation really meant something until a demand was made upon them either for Increment Duty or Undeveloped Land Duty, and the real object of this Clause is to grant an extension of time for making objections between the provisional valuation and the demand. I do not think this will in any way cause injury to the revenue provided the provisional valuation has been properly made in the first instance, but I do submit that there is a very considerable hardship on the small owner if he does not understand what this provisional valuation really is, and it is only when some demand is made upon his purse that he appreciates its full meaning. I do ask, therefore, on behalf of small owners, that this demand may be granted.
§ Mr. LLOYD GEORGEI consider that this is really a perfectly fantastical Clause, and the only excuse I can see for moving it is that the hon. Gentleman clearly did not understand it. There was not a single word of his speech which was germane to his proposal, and the only relevant suggestion was made by the hon. Member for Tewkesbury (Mr. Hicks Beach), with whose observations on the subject I will deal presently. What does this Clause propose? It proposes that there shall be no valuation except a provisional one until an occasion arises. Let the House mark what that may mean. An occasion may not arise for forty or fifty years, and it follows that you may not have a settled valuation for fifty or sixty years. Therefore, when the occasion arose you would have to go back and ascertain what the value of the property was fifty or sixty years earlier. I repeat that the hon. Gentleman clearly did not understand the Clause he proposed. I did not hear a single syllable in his speech which indicated that he had the faintest appreciation of the Amendment he has put down. I now come to the hon. Gentleman the Member for Tewkesbury, and I am bound to say that he did make a relevant observation on the question of 3113 the extension of time. He very wisely did not commend this particular Clause, but he confined himself to stating that there was ground for an extension of time, especially in regard to small holdings. I think the hon. Gentleman will find if he looks at the statute that there is a provision in the Act of 1909 for an extension of time. It is always, I am assured, granted whenever there is any reasonable ground. For example, if a man said he was not in a position to present an appeal for reasons which on the face of them appear to be reasonable, then an extension of time is invariably granted. I am assured that this is interpreted very liberally and indulgently, and I am not sure that I have ever heard of more than one case where a refusal was made. The case I refer to was that of a very large owner of property who asked for a most unreasonable extension of time, because he said it was impossible for his agent to deal with all these valuations, as he had other things to do.
§ Mr. AUSTEN CHAMBERLAINMy hon. Friend's point is perfectly clear. I am not going to deal with the question of the extension allowed in the Act, which is purely that if you know you have a case on which to appeal and cannot present your appeal in time then, on due cause being shown, the Commissioners may grant you extra time. There have been cases in which we have had to make some criticism about the refusal to consider a point raised by a taxpayer, but I am not going into that now. There are, however, great numbers of small holders who have not the least conception of the meaning of the valuation and of the method of raising the tax on the valuation. Moreover they do not perceive what the effects of the valuation will be until the tax is raised. It is then they begin to see if an assessment is unjust or unfair, and it is then that my hon. Friend asks that they should have a right to appeal. Of course it is much more difficult to find out what the value of land was forty years ago than to find out what is its value to-day, but that all tells against the landowner who has let the original opportunity for appeal go by. I do not think when a few years had elapsed you would have many appeals, but I do think that in the earlier years you would have a considerable number of well founded appeals against an injustice which had been allowed to pass.
§ Mr. HICKS BEACHMay I suggest that the Inland Revenue Department should issue a second notice after the provisional valuation has been served and before the period of sixty day expires. That would give the owner a reminder that the sixty days were drawing to a close, and that unless he raised any objections before that time expired his opportunity would have gone. I think the Government will admit that this would not be a very heavy duty to cast upon the Inland Revenue authorities and it would certainly be of some service.
§ Mr. LLOYD GEORGEI will undertake to consider that.
§ Question, "That the Clause be read a second time," put, and negatived.
§ Mr. HICKS BEACH had on the Order Paper the following proposed Clause:
Sub-section (2) of Section 25 of the Finance (1909–10) Act, 1910, shall read as if the words "and gates and gateposts, stone walls and post and rail fences, land drains and sea walls" were added to the end of the Sub-section.
§ Mr. SPEAKERThis Clause is out of order, because it would impose new taxation.
§ Mr. HICKS BEACHWith great respect, Sir, this Clause only deals with the valuation of agricultural land, and so long as agricultural land is not charged for Increment Value Duty or Undeveloped Land Duty, there could be no increase of taxation.
§ Sir RUFUS ISAACSIt may become building land.
§ Mr. HICKS BEACHThen this would not apply.
§ Mr. SPEAKERIf you make these reductions, you will lower the datum line. There may come a time when the land to which the datum line refers may be sold and pass out of the category of agricultural land into that of building land. The effect of that datum line having been lowered will be to increase the Increment Value Duty. It will add to the taxation of some people, and that fact precludes us from dealing with it on the Report stage.
§ Mr. ROYDSMy hon. Friend (Mr. Hicks Beach) said that Increment Value Duty and Undeveloped Land Duty are not payable while land is agricultural land. I suggest that when it gets out of that 3115 category and duties become payable, if a lower datum line had been fixed while it was agricultural land it would not have the effect of lowering the duty under the Finance Act when the agricultural land became building land. A new condition of things altogether would then obtain, and a new datum line is fixed.
§ Mr. LLOYD GEORGEThat makes no difference.
§ 1.0 A.M.
§ Mr. SPEAKERThat is not the set of works which is provided for in the Clause. It is an independent set of works.