LAND VALUES (RATING AND TAXATION). (Hansard, 2 May 1923)

§ Mr. EMLYN-JONES

I beg to move, That this House is of opinion that the value of land apart from improvements 1543 belongs of right to the whole community and is a proper source of public revenue; requests the Government to make a complete valuation of the land showing its present true market value apart from improvements so that taxation and rating of land values may displace the taxes, obstructive to industry and harmful to trade, that are now levied by Parliament and the local authorities; recognises that this reform has been practically and successfully initiated in other countries; and declares that it is urgently demanded in this country as a just and expedient method for opening new avenues to steady employment, encouraging house building, restoring prosperity to agriculture, and assuring to industry the fruits of industry. Although the time at my disposal to-night is very short, I am glad to have an opportunity of initiating a discussion upon what I venture to describe as one of the most pressing of our domestic problems. The problem of the land is one which cries aloud for solution, and however much we may be entitled to boast of our progress in other directions, I think it may be safely said that our land system does not reflect very great credit upon our sense of social justice. Those who, like myself, have for many years past believed in the principle which is outlined in my Motion, were hoping, in the days when the land campaign was causing angry passions to surge in the breasts of certain Members, that the problem was at last going to be tackled, and, although the Land Duties of the Budget of 1910 were thrown overboard, like so many other proposals by the Coalition Government, there are many of us on these benches who still believe that only by boldly tackling this problem of the land can we do away with many of the difficulties which beset us at the present moment. There are some who ask, "Why treat the land differently from any other commodity?" The answer is, that it differs from everything else in the world. It is here, as it was put here. We cannot add to it, and we cannot take away from it, and surely it is not unfair to suggest that the increase in the value of land, which is brought about by the energy and enterprise of the community, belongs as a right to the community, and is a proper source of public revenue.

It is a remarkable fact that whereas many years ago the land was paying a fair share of local taxation, as the land has become more valuable by the activities of the many for the enrichment 1544 of the few, it has been paying less and less of the burdens of local taxation. If there had been, years ago, a general recognition of the principle outlined in the Motion under discussion, I think many of the difficulties, such as housing, unemployment, and the under-cultivation of land, would not have arisen. What does the taxation of land values really mean? It might be described in another way as the exemption of improvements from taxation. A tax upon land values is not a tax upon land at all. It is a tax upon the value of land. This is something which the opponents of this principle have failed, or do not desire, to understand. Indeed, in my own constituency, which is entirely agricultural, my advocacy of this principle was construed as inferring a desire on my part to place still greater burdens on agricultural land, whereas it is not difficult to prove—and I hope I may succeed in doing so before I sit down—that so far from that being the case, the effect would be so beneficial, that very little would be heard in the future of the agitation which is now going on in the agricultural districts as to the unfair incidence of local taxation. The tax would, of course, fall with great severity upon valuable land, not in proportion to the use made of that particular land, but in proportion to its value. It would be a tax on the ownership of land; in other words, the State would take what would otherwise go to the owner. There would be free scope for individual energy and initiative because there would be no taxation as at present upon the results of that energy and initiative; the only value that would be taken into consideration would be the value of the bare land, having regard to its position, public improvements, etc. The farmer, for instance, who was occupying a certain acreage, no matter to what extent he used his brains and employed scientific methods, would be rated exactly on the same basis as would the occupier of a similar amount of land which he kept under-cultivated. The effect would be that there would be no discouragement, as at present, of skilful and scientific farming, but every discouragement to bad farming, because there would be no possibility under this plan of appeals being made, as at present successfully, for reduced taxation based upon the lower assessable value through under-cultivation or other neglect.

1545 The man in a city who erected a building on a certain site and in so doing gave employment, and caused money to be circulated, would be taxed exactly on the same basis as a man who kept a similar site idle. The effect would be that it would not pay a man to withhold land from the community, but if he did, he would have to pay, as I submit he ought to do, for the privilege of so doing. In my opinion ownership of land imposes on the owner sacred obligations, and surely, no system ought to be tolerated in any country which allows a man to withhold land from the community with impunity, as he is able to do at the present time in this country. I submit that a good many of our housing difficulties would not have arisen had it not been for the problem of the land. Many instances have been given in this House of the enormous rise in the value of land owing to the housing necessities of the people. There is no time for me to-night to give many instances, but I think just a few are necessary, not only as a reminder but by way of reinforcing the arguments which I am bringing forward.

The London County Council, for instance, paid £295,544 for housing land at Becontree which was previously assessed at £3,950. They paid £50,339 for a housing site at Bellingham where the assessment was £490. They paid £120,000 for housing land at Roehampton which previously had been assessed at £957. The whole of the 2,450 acres for which the London County Council paid £465,883 were assessed at £5,031. Surely both these valuations cannot be correct? Either the purchase price, calculated upon 20 years' purchase, should have been something in the neighbourhood of £100,000 or the assessment value should have been something like £23,000. In either alternative, I submit that the ratepayers would have had the benefit; but the story is not complete. One has to reckon with the enormous tariff which is levied upon these houses when they are erected. In the case of the 2,450 acres referred to, allowing for the building, say, of 12 houses per acre—and incidentally I hope that no more than 12 houses per acre will be built under the Housing Bill—12 houses per acre, at an assessment of £20 per house, we find that the assessment value would go up from £5,031 to £588,000 per annum. This is some 1546 measure of the burden placed at the present time upon the building of houses which, I submit, could be much reduced by the adoption of a plan for the rating and taxing of land values. The prices charged for land in many cases were nothing but an exploitation of the dire needs of the people, and surely there cannot be any injustice in a system which lays down as a cardinal principle that the value attaching to land, as exemplified by the price asked for it when it is required for housing sites, should be the value upon which the owners should pay their contribution to local taxation.

Can it be said that the owners of the land have done anything to improve the value of it? [HON. MEMBERS: "Yes."] Hon. Members opposite will have an opportunity of showing how it can be said that they have done anything to improve the value of such land. Surely it is the application of labour to land which creates the wealth, and not only has labour been increasing the wealth of the land, but the workers have had to carry an ever-increasing share of the burdens of local taxation. When it is proposed to change any system the question always arises as to whether it is just, but justice is apt at times to assume very distorted proportions, and I cannot help thinking that our sense of justice in this matter has been sadly warped by habit. We should ask, not is it wise, but is it right that the present system should continue. How would the rating of land values affect agriculture. It is generally admitted that the occupiers of agricultural land require for their business an amount of rateable property which is large in accordance with their ability to pay, and as such they have to carry an undue share of the burden of local taxation. The late Lord St. Aldwyn, in giving evidence before a departmental Committee on Local Taxation, said that: The burden of the rates pressed more heavily upon the poorer than the wealthier classes. Surely in no instance is this more exemplified than in the case of the small occupiers of agricultural land. Successful farming depends largely upon individual energy and initiative, and there can be no satisfaction in the conduct of any business which is being constantly penalised for energy and enterprise. The substitution of the present system by a tax upon the site value of the land 1547 would in my opinion remove many of the anomalies of which the farming community rightly complain. They say quite rightly at the present moment that they have to bear far too great a share of the cost of education, road maintenance, and the police. What could be fairer than a tax upon site values and the entire elimination of these local charges which are being levied now for national purposes? The taxation of land values would be a tax upon the natural opportunity. A farm with buildings valued at three-fourths of the whole would get relief to the extent of three-fourths of the original assessment, on a farm where buildings were valued at one-half of the whole property a reduction of one-half of the original assessment would be obtained.

The smallholder is penalised under our present system even more. Some years ago a county council not very far away took over 660 acres of land with the very laudable idea of converting it into 27 small holdings. The assessment before the establishment of the small holdings was £150 per annum, but the money expended upon the setting up and equipment of those holdings was made the excuse for increased taxation, and the assessment went up from £150 to £580. In all cases the expenditure of money is made an excuse for imposing extra taxation upon the smallholders whereas we know very well that collectively these smallholders are far less able to pay taxes than the owner of the estate, who, in any case, would have been called upon to pay a much smaller sum. In many successful agricultural countries—and I would like to emphasise this, because it is always argued that this proposal is going to be injurious to agriculture—the taxation of land values is in practical operation. In Queensland, New South Wales, Western Australia, a large part of New Zealand. Denmark, and throughout the western provinces of Canada, the taxation of improvements is unknown. In the Transvaal, many village councils, which correspond to the shires in this country, the authorities have availed themselves of their optional powers to levy a tax upon site values. In Denmark the agitation for the taxation of land values which was incorporated in an Act of Parliament in August of last year, was conducted mainly 1548 by the peasant proprietors, to whom the success of agriculture was absolutely vital.

In Canada, which the opponents of this principle very often refer to as an indication of failure, the system has, indeed, most justified the expectations that were held in regard to it. In all of the large towns and cities west of Manitoba, by far the largest proportion of the rate revenue is derived from a tax upon the site value of the land. There is no time to-night, unfortunately, to deal with all the popular arguments against this principle. Its opponents refer to the failure of the land duties in the Budget of 1910. [HON. MEMBERS: "Hear, hear!"] I am very glad to hear that applause, because the answer to that sort of argument is that the Budget of 1910 did not contain, by any stretch of the imagination, the principle which I am asking the House now to affirm. The proposal to tax land values is a proposal to levy a uniform tax upon all land, whether used or not, and to remit a corresponding amount of taxation which is now being levied on improvements and upon trade and industry. There was nothing of this sort in the Budget of 1910. The Land Duties therein incorporated were certain discriminating taxes to be levied upon undeveloped land, with an increment duty in cases where the land was sold or a lease was granted.

I would like to remind the House that many municipal authorities have passed resolutions in support of the Motion which I now have the honour of submitting to the House—such as for instance, Hull, Bradford, Coventry, Darlington, Manchester; and in my own native city of Cardiff, which sends three Members to this House to support the Government—which fact I mention as an indication of its political complexion—the resolution was carried with only one dissentient. The principle embodied in this Motion can be carried out without any fundamental change in the Constitution, and I submit that it can be recommended on the two-fold ground of justice and of wisdom. I ask the House to give its assent to this Motion in order to deal adequately with the difficulties of the land system of this country and to give an earnest of their desire that that which belongs to the people shall rightly be restored to the people.

§ Mr. H. H. SPENCER

I beg to second the Motion.

The right hon. Gentleman the Member for Chelmsford (Mr. Pretyman) the other day in this House, when speaking on the land question, said that a pennyworth of practice was worth a pound of theory, and, as I have had the luck, in a somewhat chequered career, to travel in a good many English Colonies, I have looked up a few of those pennyworths of practice, in order, if I can, to point the argument which my hon. Friend has just put forward. Some years ago I was driving in Toronto with a friend, and he showed me the new University buildings. He said, "If I had bought the plot on which those buildings stand what a rich man I should be to-day." I said, "Why did not you?" and he said, "It was not so much the cost of the land as the taxes. I should have had to pay taxes, and I could not see my way to doing so." I said, "In England, if we buy land and do not use it, waiting for it to grow worth more, we do not pay tax." I had the greatest difficulty to convince that wealthy Conservative friend of mine, who was a large business man in Canada, that we in England were such fools. He argued the point. He said, "This land on which the Toronto University is built was growing in value every year. Why should I not pay city taxes? It is the people of the city who are making that land more valuable, and why should I not pay?" I said, "In England directly you use the land and create employment you pay tax on the land and the improvements, but if you were in England so long as you did nothing with this land and the people of Toronto made it more valuable you would not pay at all." That was the practice in Toronto, in Australia, and in New Zealand. It is because of that practice that we are paying millions and millions of pounds to get rid of our men and to send them to these countries where they can make a living. Because of that practice we see the Socialist party 140 strong on those benches. It is one of the reasons, because if this thing for which we have been fighting for so many years had been put into practice the causes which have made Socialists would not have been there. The greatest of those causes is the housing question, and even the Socialists have the glimmerings 1550 of light to see that on the land question depends the housing question.

I will give one or two instances of the injustice of this thing. A friend of mine in Lincolnshire had land on the fen. There was a drainage authority, and we took several hours the other night discussing whether the West Riding County Council should be allowed to levy a drainage rate. My friend was a very good farmer, and had one of the best cultivated farms in Lincolnshire. Across the way of this drain is one of the worst farms in Lincolnshire, and because my friend was a good farmer he was paying four times as much per acre for drainage as his neighbour who was a bad farmer. Surely, if there is any equity at all in this country, the Drainage Tax should have been levied equally on those two farms. They got an equal benefit, but the man who was deprived of a portion of his earnings was the man who was the useful citizen. That, we say, is unjust. You will notice in the underground railways a little bit of elementary economic teaching. Sir Albert Stanley, as he then was, is the great controller of the underground railways, and he sat in the Coalition Government. The underground tell you that they are making the value of London suburbs. They also tell you that the value does not go to the London people. The value that the underground are making, and which incidentally is made by the people who live in those suburbs, is all going to the owners of the land in those suburbs.

I have just time to tell a little parable of my own town. About 60 or 70 years ago there came a humble foreigner of Jewish extraction from Germany. He was a political refugee. He lived and worked in my city and he built up a very large export trade. He used considerable premises to do it. He paid rates, which were growing year by year, particularly in my own town, which has had a good deal of socialistic administration. He paid Income Tax on his earnings. He paid very heavy Excise and Customs duties on his luxuries, and we know that the Jews when they make money like to spend it. He was taxed on his industry at every hand and turn and corner. He started at nothing and finished with a lot. All that time he was paying tax. Just about the same time that he came to Bradford the principal landowner of Bradford succeeded to the 1551 estate. His land at that time was not worth a twentieth of what it is now. He hardly ever came near the town. He did no work for the town. Year by year he sold a little piece at 5s., is., 10s. a square yard for building, and of course only the land that was becoming what they call ripe. I got an acre of land six miles out of the town for £40 an acre, but the poor people in the town had to spend £300 or £400 an acre because they could not afford to go out. Their children must be educated close at home. The difference was this. The useful citizen was taxed, taxed, taxed. The man who did nothing and grew rich while he slept—when the end of his life came Bradford had made for him, without his working at all, far more than the other man had made by a long life of clever toil and financial genius. It is not equity, and because it is not equity all the great municipalities—Glasgow, Manchester, I believe even Liverpool, that home of Toryism—have passed Resolutions in favour of this great reform. Sir Henry Campbell-Bannerman said, long ago, that our present system of taxation and rating is a hostile tariff against building. I was one of the few men in the House who voted against the Housing Bill on the principle that we should not tax the poor to give a subsidy to any trade. If you would untax the buildings, if you would take the rates off improvements and put them upon land values, upon that form of wealth which is created solely by the community, you would want no subsidy. We should have no tinkering or interference by the Minister of Health, or any other Minister, on the housing question, because houses would be built by the people for the people at a price people could pay.