HC Deb 01 August 1913 vol 56 cc1009-15

It is hereby declared that the original site value of land for the purpose of Sub- section (5) of Section 3 of the principal Act (which provides for a reduction of the amount of Increment Value Duty payable. on any occasion), is the assessable site value of the land as calculated under Section 25 of the principal Act, and that the site value on any subsequent occasion for the purpose of that Sub-section is the site value as ascertained under Subsection (2) of Section 2 of the principal Act on the last preceding occasion for the collection of Increment Value Duty; but where on an occason for the collection of Increment Value Duty which occurs after the commencement of this Act the site value on which the reduction would be calculated is less than one hundred pounds, the reduction, if the person chargeable with duty so requires, instead of being at the rate of 10 per cent. on that site value, shall be at the rate of 10, per cent, on the increment value.

Mr. PRETYMAN

I have to raise, as a point of Order, the question whether Clause 6 does not increase the charge on the subject; in which case I believe that it would require a separate Resolution. The Resolution on which this Bill is founded contains no provision authorising an increased charge upon the subject. Under this Clause, we are dealing with what is. known as the minus values case. When that case was heard in the House of Lords, it was pointed out that the 10 per cent. could not be calculated on the assessable site value where the assessable site value was less than nothing or was a minus quantity; because it was impracticable to make a deduction of 10 per cent. from a minus quantity. There are many absurdities in connection with this very difficult Act, and that is one which bas rather struck the imagination of the public. The case was heard in the Scottish Court, and the Scottish Court unanimously decided that a minus value was illegal and could not exist. The case was then carried to the House of Lords, and the House of Lords decided that a minus quantity could exist. In giving that decision, they were met with the question: How is it possible to take 10 per cent, from the assessable site value if it is a minus quantity? Two of their lordships, in giving judgment, delivered themselves of the dictum that this could not be put on the assessable site value, but must be on the full site value. If the 10 per cent. is taken from the full site value, it involves a considerably larger deduction than if it is taken from the assessable site value. Therefore, under the present law, according to that dictum, the 10 per cent. is taken from the full site value. This Clause says it is to be taken from the assessable site value, and that being a lesser deduction will increase the charge on the subject, because the less the deduction the greater the charge. If that is so, I ask whether that would not involve a different Resolution?

Sir RUFUS ISAACS

I think the hon. and gallant Gentleman is mistaken. He has said there were some observations made in the House of Lords on the minus value. I should like to point out that as a matter of fact it does not change the law in the slightest degree. There was nothing said in the House of Lords on this subject. On the contrary, what the House of Lords did was to pronounce a decision that the view taken by the Government in this matter about minus value was quite correct. There was a discussion on the 5 per cent. or the 10 per cent., but what was said was no part of the judgment. If there was any doubt about it, it no longer obtains, because the Court of Appeal yesterday, in giving the decision which it did in the Lumsden case, came to the conclusion and said perfectly plainly that the observations which were made in the House of Lords were no part of the judgment, and were not assented to by the Lord Chancellor or by Lord Atkinson. The only effect of this Clause, according to the view which I take, and which the Government advisedly takes, is to leave the law as it stands, with this difference that it reduces the charge in certain cases, it does not increase it. It reduces that by saying that 10 per cent. shall not be levied on the increment value, instead of on the assessable site value. But it is not necessary for me to go into that. It will not be disputed that this is a reduction and not an increased charge. The whole point of the hon. and gallant Gentleman is that something said by the House of Lords has changed the law. I deny that.

Mr. PRETYMAN

I did not suggest that at all. What I said was that the previous condition of the law, which was doubtful, had been made clear by that dictum of the House of Lords, and by that dictum the law was construed by the Department.

Sir RUFUS ISAACS

That does not make any difference.

Mr. CASSEL

The right hon. and learned Gentleman has spoken of the dicta of the House of Lords. But you are asked now to decide that they were wrong; you are asked to rule that the dicta are not in accordance with the law. That is a very strong order, especially as they have now obtained a decision in their favour on the minus value point by convincing the Lords Justices that this was the true interpretation.

Sir RUFUS ISAACS

May I draw attention to the fact that according to the shorthand note in the Lumsden Judgment, it was pointed out that these dicta were no part of the decision, and were not assented to by the Lord Chancellor and Lord Atkinson?

The CHAIRMAN

That is not a matter for me, either on one side of the other. The point put by the hon. and gallant Member for Chelmsford is perfectly right. He is right in the principle he lays down. If this Clause either imposes a charge or diminishes existing relief, then it would require a Money Resolution, and I could not put it to the Committee until such a Resolution had been passed in Committee of Ways and Means. But I have examined the case and endeavoured to arrive at the exact facts. They appear to me to be these: This Clause is not in any way detracting from any existing relief, in fact the very contention of the right hon. Gentleman's Friends in the case to which he refers—as I think he admitted just now—has been all along that you cannot reckon 10 per cent. on minus value. That was the main argument in the Court of Appeal. I do not see much difficulty, by using his own arguments rather than those of the learned Attorney-General, in saying that what this Clause does is to turn into a substantiality something which had no reality before, as the hon. Member himself admitted. Therefore it is the granting of a relief, and not the diminution of a relief to the subject, and I cannot rule that it requires any Resolution in Committee of Ways and Means.

Mr. CASSEL

I beg to move to leave out the word "assessable" P is the assessable site value"], and to insert instead thereof the word "full."

5.0 P.M.

This, with certain consequential Amendments, would give effect to the dicta of the Judges in the House of Lords, who interpreted the law to be as it would be if that word were inserted instead of "assessable"—that is to say, to leave it on the same footing throughout, that in every case you should make the 10 per cent. deduction on the full site value. That would be a reasonable way of dealing with the matter. Then it would be applicable to the minus value cases as much as to the plus value cases. This Clause proposes an absurd and arbitrary distinction. It proposes in the case where the site value is less than £100 to reckon the 10 per cent. deduction upon the increment, and in all other cases to assess it upon the assessable site value. If my Amendment were accepted, in every case the deduction would be upon the full site value. That is what the dicta of the judges in the House of Lords held to be the law as it is at present. I agree they were merely dicta, but they declared that to be the law now. If you take assessable site value as the basis for reckoning the 10 per cent., you diminish the deduction in proportion as a man has made improvements on his property. The more improvements he has made the less will be the deduction. If you take it on full site value, the question of improvements does not come- in. Say the full site value is £1,000. He gets a deduction -of £100 from whatever the increment is. If, on the other hand, you take it as being assessable site value, assuming the man has made improvements, to the extent of 2500, he does not get £500 deduction, but only £50. Could there be anything more absurd? It is going contrary to every principle upon which the right hon. Gentleman based the duty. He based the duty on the principle that people are to be taxed only upon that part of the increment which is due not to their own efforts or to their own expenditure. Here you are really taxing them more heavily in proportion as they have made a greater expenditure upon their property or, by their own efforts, have increased its value. That is an absolutely absurd way of proceeding with the assessment of the 10 per cent. deduction on the Increment Duty. It is a point of considerable importance, and one which ought to be fully considered. I also submit that if you adopt the principle of the Clause you create a distinction which does not exist under the law as it is at present, which is wholly unreasonable and wholly indefensible, between cases where the property is over £100, and where it is less than £100, a distinction which on no principle of logic or reason can possibly be justified.

Mr. LLOYD GEORGE

The hon. and learned Gentleman has asked me to reopen the whole question of the basis of 10 per cent. If it is to be reopened, the matter of minus values has to be reopened all round. The 10 per cent. has been a very serious diminution in the value of the Increment Tax up to the present. In fact, it has stood in the way of its fructifying within these first few years. If he is going to insist on making the 10 per cent. upon the full site value instead of the assessable site value, it is tantamount to something which is 10, 15, 20, or even 30 per cent. in some cases. That is a demand which has never been brought forward, and if it is to be 10 per cent., it must be 10 per cent. on the assessable site value. That intention was clearly stated at the time. I cannot possibly accept the dicta which he quoted of the judges, which were not accepted yesterday by the Court of Appeal. We must adhere to the position which we have taken up.

The Prime Minister indicated that we should not sit beyond five o'clock, and if the hon. Gentleman and his Friends insist upon it, I will instantly move to report Progress. But might I suggest that we should dispose of this and the next Clause?

Mr. PRETYMAN

I should assent to that subject to my hon. and learned Friend not desiring to discuss the Amendment further.

Mr. CASSEL

I am willing to withdraw the Amendment under the circumstances, though I feel strongly the injustice and hard-ship of imposing a heavier duty on a man in proportion as he has made greater improvements.

Amendment, by leave, withdrawn.

Mr. T. M. HEALY

When does the right hon. Gentleman propose next to take the Bill?

Mr. LLOYD GEORGE

I shall have to consult the Prime Minister, but due notice will be given. I shall be very much obliged if the hon. and learned Gentleman and the hon. and learned Gentleman (Mr. Healy) will put themselves in communication with the Government in regard to their Amendments on the Reversion Duty.

Mr. T. M. HEALY

As far as I am concerned I accept the Amendment of the hon. Member for Kingston.

Mr. LLOYD GEORGE

That goes too far.

Mr. T. M. HEALY

Mine does not go far enough. Let the Government put their own Clause on the Paper. That is really fair. It is not fair to us not to see what the Government propose. Let the Government put their proposal on the Paper, and we will have an opportunity of deciding. I ask that it should be done before we meet again.

Mr. PIKE PEASE

I suppose the Bill will not be put down for after Eleven o'clock?

Mr. LLOYD GEORGE

Will the hon. Gentleman put a question to the Prime Minister on Monday?