NEW CLAUSE.—(Amendment of Law as to redemption of Land Tax.) (Hansard, 3 July 1928)

I beg to move, "That the Clause be read a Second time."

It is generally agreed that it is desirable to encourage landowners to take all the burdens possible from the land. The new Clause seeks to make the purchase price of the Land Tax 20 years instead of 25 years as at present. I would remind the Chancellor of the Exchequer that under the 1896 Act it was 30 years on a 3 per cent. basis. In 1921 it was made 25 years on a 4 per cent. basis. This Amendment seeks to make it 20 years on a 5 per cent. basis and consequently to give more encouragement to the landowner to redeem his Land Tax. In view of the fact that trustee securities and other first class securities can get 5 per cent., it does not scent much encouragement if the landowner can get only 4 per cent. The income from the Land Tax was £673,464 in 1925–26 and, if this 5 pr cent. purchase were granted it would mean only a loss of £120,000 or £130,000. The most important point is that the tax is an onerous tax to deal with and tends to hinder improvement and development. The tax increases as the annual value of the land is added to, and if any works are carried out and buildings are erected it increases the burden of the tax; and, if it is intended to develop building land, one of the first steps a landowner must take is to redeem the Land Tax. As there is a great need for building now, this is a good time to encourage the owner to develop his property in that way, and in the national interest we should give him favourable terms for redemption for the same reasons that were given in 1921 for the reduction from 30 years to 25 years.

§ Mr. A. M. SAMUEL

My hon. and gallant Friend made use of the expression, "to give him favourable terms for redemption." When I look at the existing law, I must say that I think the 1231 landowner has very favourable terms for redemption now. He is able to redeem his tax on 25 years' purchase and my hon. and gallant Friend desires that he should have the right to redeem it on 20 years' purchase. I do not think it right or just to take 5 per cent. as the standard yield of trustee securities. My own native city of Norwich does not pay 5 per cent. It has raised a loan in only the last few days at 4¾ per cent. Old 2½ per cent. Consols are at 56 and yield £4 7s. 6d. per cent. That means that if you put your money in Consols you get £4 7s. 6d. per cent. If you invest it in redemption of Land Tax you get £4 per cent. There is an advantage now which accrues to landowners, which should not be lost sight of. The position which he is in of being able to redeem Land Tax at 25 years is one that he should take advantage of now for his own benefit, or he may one day regret not having done so. Take a plot of land, say, of the annual value of £5. The Land Tax at say 1s. in the £ charged on it works out at 5s. a year. As it now stands he can redeem that 5s. for £6 5s., that is by 25 years' purchase. Suppose that plot of land becomes developed for building, and that the value of the land with the buildings upon it becomes worth £125 a year. If he wants to redeem that £125 and the tax is 1s. in the £ he will have to pay 25 times £6 5s., whereas if he redeems now while conditions are so favourable, he can redeem for £6 5s. I therefore think that the terms are extremely fair to the landowner, and so far from desiring better terms by being allowed to redeem his Land Tax in 20 years instead of 25, he should be contented with the conditions as they are.