LAND-TAXES—THIRD EDITION.
SO little have the Land-taxes of the Budget been yet understood that a good many people have hastily assumed that the shape which they now take is an improvement on the original version. It is an improve- ment from the point of view of certain individuals who find themselves exempted from burdens to which the original taxes would have subjected them. From every other point of view the latest version of the Land- taxes is even worse than the earliest. This latest, or third, edition is embodied in a Treasury publication described as " Part I. of the Finance Bill as proposed to be amended by his Majesty's Government." It includes all the amendments actually made in Committee of the whole House, together with those which the Government propose to move on the Report stage. There are no fewer than a hundred and eighty-two of these latter, and many more will probably be added before next Tuesday, when the Report stage begins. The mere number of amendments, however, is a com- paratively unimportant matter. What is important is the effect of the Bill, and we repeat that as now proposed it is—except from the point of view of certain favoured individuals—worse than in its original shape. It is worse because there is no longer any trace of principle to be found in it, and it is worse because the complexities involved are enormously greater than they were before. When the Finance Bill was first introduced the land clauses gave a crude expression to a principle which was at any rate intelligible,—the principle that property in land was of so exceptional a character that it was justifiable to tax it at an exceptional rate. That principle has disappeared. The land clauses of the Bill are no longer to be general in their application. They are confined to certain arbitrarily selected categories of land, and the amount of the tax to be levied depends upon entirely arbitrary conditions, almost impossible of comprehension by ordinary human intelligence. So complicated, indeed, is the Bill in its proposed shape, so mutually contradictory are some of its provisions, so utterly devoid of principle is the whole scheme, that we refuse to believe that these clauses can become the law of the land. However weary the members of the Opposition may be, it is their duty to fight these clauses on the Report stage resolutely and persistently so as to demonstrate to the country their utter folly. Let us take a few of the more obvious points. In order to levy the Unearned Increment Duty, which may still be described as the sheet-anchor of the Land-taxes, the Bill provides for a complete valuation of the whole of the land of the United Kingdom. " Each piece of land which is under separate occupan, and if the owner so requires, any part of any land- which is under separate occupation. shall be separately valued and the value shall be estimated as on April 30th, 1909." Some idea of the magnitude of this operation may be arrived at from the simple fact that there are nearly seventy-eight million acres of land in the United Kingdom, and that wherever one of these acres abuts on. to a main road, or even on to a by-road, it will be necessary to have a separate valuation of any portions which could be conveniently used for building sites. That alone would be a. sufficiently stupendous task ; but the valuation proposed is not to be an ordinary valuation such as professional surveyors have been trained to carry out. The land is not merely to be valued as it is, but also as it would be if it were stripped of every feature which gives value to it, except its geographical position. The cost of allowing for this stripping process must enormously exceed the cost of the primary valuation. Here are a few of the elements of the problem which the land valuers of the future will have to take into account. They will have to ask " what the land might be expected to realise if it were divested of any buildings and of any other structures (including fixed or attached machinery) on, in, or under the surface, which are appurtenant to or used in connexion with any such building, and of any growing timber, fruit trees, fruit bushes, and other things growing thereon." Next, they will have to examine into the charges resting upon the land, and further to inquire whether there are any public rights-of-way over it or other easements affecting it, or whether any covenants have been made restricting the use of the land. If such covenants were made before April 30th, 1909, they are to be taken into account, but if made after that date they may be ignored unless in the opinion of the Commissioners, whose judgment in this matter is to be final, they were " when imposed desirable in the interests of the public or in view of the character and surroundings of the neighbourhood." How the Commissioners, in 1930 say, are to ascertain whether covenants made, say in 1910, were or were not then desirable is a question which had perhaps better be referred to the Lord Advocate.
This, however, is only a beginning of the problems which have to be solved before the value of the land for the purposes of this new taxation can be arrived at. The Commissioners must also allow for any capital expenditure, including expenses of advertisement, which has been incurred for the purpose of improving the land as building land. They must also allow for any value which has been added to the land by giving other land for the purposes of streets or public gardens ; they must allow for the redemption of any fixed charges on the land, and this alone will be a complicated matter in the case of small parcels of land where the charge has been redeemed on the whole estate. Finally, they must allow for the cost of removing from the land all the various things which are supposed to be taken from it before arriving at its value, and this presumably will include the cost of digging up the sewers. When all these things have been allowed for, we arrive at what is called the " assessable site value of the land," and the third edition of the Bill says that wherever the words " site value " are used in the Act, they are to be taken as meaning " assessable site value," except in the case of site value " on an occasion on which increment value duty is to be collected." What is then to be the meaning of the phrase " site value " we confess that after much study of the text we find it impossible to discover. Altogether no fewer than four kinds of land value are defined : " gross value," " full site value," " total value," and " assessable site value," and some of these phrases are only used in the definition clause and never used elsewhere.
In order to obtain the necessary information on which to make these various appraisements, the Commissioners are empowered to require every occupier of a piece of land—a phrase which necessarily includes every house- holder—to furnish them within thirty days with the name and address of the person to whom he pays rent, subject to a penalty of £50. Lest the unfortunate occupier should plead that he did not receive sufficient notice, it is provided that the notice shall be deemed to be sufficient if it was sent to him by post. In the same way, when dealing with owners the Bill provides that the owner is to be deemed to have sufficient notice if the notice is deposited with one of his tenants, or in the case of unoccupied land, if the notice is put up in some conspicuous place on the land itself. Imagine the feelings of a working man who has bought a couple of cottages as an investment, and who is told that he is liable to a penalty of £50 because his tenant—another working man—had neglected to forward him one of these notices from the Inland Revenue Commissioners !
When the Commissioners have got hold of the person whom they think to be the owner, they can then proceed to administer to him a series of interrogatories. They can demand to know what rent he receives ; what is his title to the land ; what is the area, character, and use of the land; what consideration was given for it on any previous sale or lease ; and " any other matters which may properly be required for the purpose of the valuation of the land." If the person who is deemed to be the owner fails to give all this information within the specified time, he will be liable to a penalty not exceeding £50.
According to the confession of Mr. Lloyd George, there are some two million separate owners of land in the United Kingdom. In addition, this Bill applies to leaseholders whose leases have more than fifty years to run. It also applies to any person who may be interested in the land as a rent-receiver, and, as every practical man knows, the rent from one parcel of land is sometimes distributed by a trustee among half-a-dozen different recipients. Bearing these facts in mind, it would not be an exaggeration to say there are at least three million people in the United Kingdom who may be called upon, under a penalty of £50, to furnish information as to facts about which in many cases they have the very vaguest knowledge. Who is to compensate them for the trouble and expense they may be put to in ascertaining these facts the Bill does not explain. All that we blow is that the cost of the army of officials to be employed will have to be borne by the general tax- payer, and that new, and probably very heavy, taxes will have to be levied in order to pay for the collection of these Land-taxes.
The interruption to the ordinary business of buying and selling land is another very important aspect of the question which has hitherto received too little attention. If this Bill becomes law, no lease for more than fourteen years can be executed, and no transfer by sale, until the Commissioners have received all the information necessary to enable them to ascertain this marvellous new thing, " the assessable site value of the land," and to levy the duty upon it. While they are making the necessary inquiries the transaction will be held up. The use of land, as the land-taxers are so fond of repeating, is vital to the human race, yet the business of buying and selling and leasing of land will be brought almost to a standstill in order to give effect to Mr. Lloyd George's version of Mr. Henry George's theories.
When this has all been done, what will result ? A series of taxes so partial in their operation as to create a bitter sense of injustice, so uncertain in their incidence that no one will know whether he will be exempt or taxed. If, for example, land is let to a golf club, it is to be exempt from the new taxes ; if the same land is let to a small holder to produce food, it will be taxed. In the original draft of the Bill greenhouses put up by a market gardener were not treated as buildings ; in the third edition they are to be so treated, but nothing is said with regard to the land around them, without which the green- houses would be practically useless. As far as can be made out from the obscure words of the final text, if a piece of land is nominally used as a builder's yard, and strewn with bits of timber and stone, it will be exempt from taxa- tion ; but if the same land is intensively cultivated as a market-garden, it will be taxed as " undeveloped land." Again, if five acres of land are let as a pleasure-garden with a large house they will not be taxed, but the same land let to a market-gardener or small holder would be taxed.
Why these follies should be perpetrated it puzzles any one outside the swim of party politics to understand. If the new taxes were going to remove any of the admitted defects of our present system of land tenure, they would be at any rate partially intelligible ; but none of these defects are to be removed, or even touched. Such evils as there are will still go on. All that will happen will be that some people will have to pay taxes of uncertain amount, and other people, quite as well off, will pay nothing.
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