ANOttle,R LAND CAMPAIGN.
IN the midst of the excitement created by Mr. Lloyd George's unexpected pronouncement upon the Navy, the public has failed to notice the importance of a letter written by the Chancellor of the Exchequer to the Land Values Group in the House of Commons about a fortnight ago. This group, which is important not so much on account of its size as on account of its activity, has been alarmed lest the Government should be meditating an abandonment of the principle of taxing land values. To members of the Land Values Group this principle is of greater importance than almost any question of contem- porary politics. Inspired by Henry George's ideas, they believe that every conceivable social reform depends upon the taxation of land on its prairie value. Mr. Lloyd George's Budget for 1909 was a somewhat clumsy attempt to give effect to this principle. It embodied the principle so far as providing for a new valuation of the kingdom with a view to ascertaining the bare site value of each plot of land, but no general tax on site value was imposed. A tax, of which many people have been unpleasantly conscious of late, was imposed on the site value of land defined as "undeveloped." and also upon the increment in site value as compared between the date of sale or other acquisition and the starting date of April 30th, 1909. The extreme Land Valuers in the House of Commons. though welcoming these steps in the direction of their principle, were by no means satisfied, and have since been intermittently pressing the Government to give full effect to the Henry George conception of a universal tax on the site value of the land. In view of the now admitted failure of the Land Value Taxes of 1909, the Government were naturally shy of pro- ceeding further, and it may be fairly assumed that the land campaign started by Mr. Lloyd George last autumn was intended both to cover up the failure of his Land Taxes and to sidetrack the demand for a new scheme of land taxation.
In view of this danger to their creed the Land Valuers have organized themselves, and have at length succeeded in extracting from the Chancellor of the Exchequer a letter which appears to commit him completely to their view. He writes : "You may depend upon it that the Government definitely intend to utilize the valuation which they are putting through at great expense for purposes of compelling the owners of sites, which are not now bearing their share of local taxation, to contribute on the basis of the real value of their property. There is no intention of shirking the issue. Of that I can assure you." The letter goes on to say that there are several alternative proposals for taxing site values, and that the Government must be allowed time to consider which of these proposals is best, especially as the members of the Land Values Committee are not themselves agreed upon this point. This may mean a somewhat prolonged postponement of any practical scheme for any general tax on land values, but it means an immediate political campaign, supported by the Govern- ment, in favour of such taxation. In other words, the
country will have to face another land campaign on the top of that sketched out by Mr. Lloyd George in the autumn and sanctioned by Mr. Asquith.
It will be noticed that these two campaigns are on entirely different lines, and indeed based on entirely different conceptions. The land campaign, properly so called, involves the establishment of Governmental machinery for regulating the use of laud in almost every detail. The farmers' rents are to be supervised by a judicial Commission ; the labourers' wages are to be over- hauled by the same or a similar body ; and a like authority is to be established to fix the prices at which the State may take land from private individuals for any purpose. The scheme of land taxation neither implies nor requires any such system of State* regulation. Henry George's theory was that, if only the tax on the bare value of the land were sufficiently heavy, private enterprise would do the rest. That, it may be remarked, was the theory underlying Mr. Lloyd George's Land Taxes in the Budget of 1909. He then told Us that his taxes would lead to the better development of laud. to the abolition of the slums, to the creation of garden cities, and to the abolition of unemployment. And that is the kind of language which the members of the Land Values Group in the House of Commons continuo to use up and down the country in favour of their larger proposals.
Numerous occasions will be certain to occur for deal- ing with this subject, probably in the near future, but it is worth while briefly to put on record some of the fundamental objections to any scheme for transferring local taxation from fixed property as a whole to that par- ticular form of fixed property known as the bare site value of land. Some of these objections have been considerately stated by the Manchester Guardian in an article giving, as might be expected, a general support to any proposal which Mr. Lloyd George endorses. The Manchester Guardian takes the case of a Site Value Tax of 3d. in the pound on the capital value of all sites, and asks who is to pay this tax. It takes first the ease of a business firm which has acquired the freehold of premises in the heart of Man- chester. The firm has paid full prise for the land, and the previous landlord has gone off with the "unearned incre- ment." Perhaps he acquired the land for £10,000 many years ago, and has now sold it for £40,000 and pockets the difference. But the firm will have to pay 3d. in the pound on the £40,000. "They have not only paid the full price to the landlord, but will be taxed by the State on the price they have paid." Next our contemporary takes the alternative that the firm may hold its premises on a long lease. In that case it would be clearly uujust to tax the landlord on the full value of the land, which he is not receiving ; while if the tenant firm is made responsible for the tax—as it must be in justice to the landlord—then there is no relief to industry. The Manchester Guardian sums up its argument on this point by saying : "If we clap a national tax on to site values, and at the same time change the incidence of the rates from the building and site together to the site alone, we shall find that very serious results would accrue to whole classes of business men as well as to landowners." In passing, we may note the implied suggestion that it does not much matter if serious results accrue to landowners, though it is a very grave matter that business men should also suffer. Faced with these practical difficulties, the Manchester Guardian urges that if any Site Value Tax is imposed, it must be a moderate one, nd suggests a penny in the pound. No doubt a penny in the pound sounds moderate to people who only compare one with two hundred and forty. But the penny is calculated not on annual but on capital values, and it only needs an elementary knowledge of arithmetic to see that if interest be taken at an average figure of four per cent., a penny in the pound on capital values is the exact equivalent of 2e. Id. on annual values. That is not a moderate tax at all. It is a very heavy addition to existing rates.
Nor has the Manchester Guardian by any means exhausted the practical difficulty in the way of imposing this or even a really small tax. Conceivably the Liberal Party would have no moral objection to imposing upon landowners a new Land Values Tax even in cases where tenants have contracted to .pay all rates and taxes except landlord's Income Tax. But what does the party propose to do with the ease of land held upon mortgage ? There is no economic difference between hiring a piece of land with a ground rent upon it and buying the same land with a mortgage upon it. In each case the actual occupant of the land has to pay a fixed annual sum to the person from whom he took the land. But, apparently, according to the Liberal code of ethics, the imposition of a ground rent is a moral iniquity, but interest on a mortgage is legitimate business. If this is the view which Mr. Lloyd George proposes to take, it is clear that landowners can evade his tax by converting their leaseholds into freeholds subject to a mortgage. The whole burden of the new tax will then fall upon the actual occupant of the land, and, needless to say, that will deprive the policy of any popu- larity it might otherviise have had.
A further matter of very great importance is the question of valuation. Mr. Lloyd George indicates that he proposes to use for the purpose of this new tax the valuation which is now being made, as he candidly admits, at very great expense. The expense is certainly enormous, but the merits of the valuation are lees easily assessed. Anyone who will take the trouble to study in detail the valuations now being made by an army of officials throughout the kingdom will discover that they are useless for the purpose of any honest tax. They are based on no consistent theory ; they neither value the land as it is with all the improvements upon it, which is the common-sense proceeding, nor do they value it as it would be if stripped of all improvements. The Budget of 1909 was full of exceptions and anomalies, against which some of the Land Taxers themselves protested at the time that measure was under discussion. It is sufficient here to note one or two examples. When a farm is being valued allowance is made for the cost of the drains to the farmhouse, but not for the cost of the drains to the land. Again, many of the allowances which have to be made under the Act are only made when a claim is put in by the owner. But an immense number of owners are too puzzled by the terms of the valuation to realize what kind of claims they ought to make, with the result that in many properties deductions are made because claimed, while in similar properties similar deductions have not been made. Yet when the valuation has once been completed it remains fixed, with the result that two properties in every respect similar may appear in Mr. Lloyd George's new Doomsday Book with totally different valuations.
Doubtless these difficulties could be surmounted by an entirely new valuation at the cost of new expense. But however perfect the valuation, it would still leave standing the objection to this method of taxation. The real issue can be simply stated. Until Henry George's book, Progress and Poverty, upset the minds of a good many otherwise sober Englishmen and more Scotsmen, everyone in this country was agreed that the ideal of taxation was to tax people according to their means of payment. So far as local taxation is concerned, one test of ability to pay is the possession of valuable property, whether it be land or house property. It is not a complete test, and if the practical difficulties could be overcome, it would be far better to substitute for local rating a local Income Tax. But, at any rate, the present system does aim at taxing people according to ability, whereas the Henry George system aims at taxing only those people who happen to possess land which happens to retain a theoretical site value after it has been stripped of all the improvements made upon it by generations of human labour. That means that the whole burden of local ser- vices is to be thrown upon a minority only of the persons who benefit by them. It further means that instead of the tax falling most heavily upon those who can afford to pay most, it will fall in an entirely arbitrary manner. Some very poor people will see the whole of their income absorbed by this new tax, other very rich people will be paying next to nothing. The whole scheme is a denial of the normal conception of human justice.
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