THE BUDGET LAND CLAUSES.
[To THE EDITOR OF THE " SPFCTATOR."] SIR,—It may seem an ill return for your courtesy, but I am tempted to make one or two further remarks on your very moderate and conciliatory reply to my letter in your issue of August 14th. It is a great thing, at any rate, to have dis- covered that this question of land values taxation is not yet quite beyond the limits of rational argument.
Your reply to the Government's proposals is that every man should be taxed on his income. Well, you will not deny that here, at any rate, there is room for honest difference of opinion.. It is not one of those propositions on which all countries agree. In choosing objects for taxation some com- munities, indeed, do prefer income; but many other com- munities prefer to distinguish between forma of property, and to lay their taxes with some social preference for those kinds of private ownership which appear to do least injury to the common well-being. In this country the Income-tax gives us only a fraction of our revenue, and still even to-day retains some touch of its original characteristic as a war-tax. I need not recall that it was up to 1874 a tax of a precarious and only temporary nature,—abolished after the Napoleonic Wars, renewed in 1842, and twice doomed to death by Mr. Gladstone, first in 1853, and then in 1874. He would be a bold Chancellor of the Exchequer who announced that he was going to adopt the Income-tax as his chief and almost only source of revenue. That seems to me a more revolutionary proposal than any put forward by the Government.
On the other hand, the taxation of luxuries is one of the most deeply rooted principles of English finance, and I take
it that there is no greater luxury than the possession of
undeveloped land. The peculiar characteristic of undeveloped land is that it is a form of capital which, while growing, is
producing no income, and it is therefore impossible to touch it by an Income-tax.
I am glad to find, on refreshing my memory, that these are by no means novel propositions. In chap. 2 of Book V. of his
famous work, Adam Smith, the "father of Free-trade," speaks as follows :—
"Ground-rents are a still more proper subject of taxation than the rent of houses."
And again, a little further on :— " 8uch a tax would fall altogether upon the owner of ground- rent, who acts always as a monopolist and exacts the greatest rent which can be got for the use of his ground."
That, perhaps, is a slight overstatement of the facts as we know them in modern society, but it is a relief to find that the very moderate proposals of the Government, which do not extend so far as to a universal tax on ground-rents, but stop short at a tax on increments and reversions, have the sign-manual of Adam Smith.
In regard to the Duke of Westminster, I would only submit that if every owner of leaseholds had applied the letter of the law as he applied it in the Gorringe case, the leasehold system
would long ago have been abolished as an intolerable and oppressive anomaly. The best land system in the world is only to be saved by the equity of those who administer it.—
I am, Sir, &c., HAROLD SPENDER. 47 Campden House Court, W.
[We deal with Mr. Spender's letter in our leading columns. —En. Spectator.]
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