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Social Problems.

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Social Problems. THE TAXATION OF LAND VALUES. by Joseph Hyder, General Secretary to the Land Nationalisation Society. ARTICLE XXII. "We have just been driving along your magni- ficent Embankment, but at whose expense was the ^^t, permanent, and staple improvement made? 0f being made, as it should have been, Alainly at the expense of the permanent propriet- a.ry interests, it was charged, every shilling of it, "Pon the occupants, either upon the wages of the labouring man in fuel necessary for his family, Or Upon the trade and industry and enterprise ""hiell belong of necessity to a vast metropolis like this."—ijr Gladstone at the Memorial Hall. Lon- don, on July 29th, 1887. Ice land around these populous centres is rated tlot in regard to its prosepective value, which as yolit all know, is derived entireiy from the prox- ^ty of places where enterprise and activity are, "'hile the owners of the surrounding land were asleep in their beds—adding every day every hour tQ its value."—Mr John Morley at Forfar on Monday, October 4th, 1897. survey of the land question would be com- which did not take account of the move- ment for the taxation of land values. It is a Movement which has attained considerable strength of recent years, and is destined to make its mark the Statute Book. It includes men of very j 'gent views. The principle of taxing land has supporters in the ranks of both the great pkti" in the State. Practically every Liberal is fitted to it. Even some Conservatives be- eve in it. It is endorsed by the Socialists. A little time ago an important conference was held ttPon it in Bradford, and it was reported that ever 200 assessing bodies in England and Scot- lod had passed resolutions in its favour. More ^tly gti]i the Battersea vestry convened a con- nce of the rating authorities in London, when 1t 1tas supported by an overwhelming majority of the delegates present. At the last municipal elec- 11 ()f the London County Council every Progres- lVe candidate was pledged to it. And it was one of the items of the Newcastle Programme. The Unfair Exemption of Landlords 001 their rightful share of taxation is a grievance kjtich the majn body of the taxpayers have long uncomplainingly. But at length their ailence 18 being displaced by the unmistakable grumbling agitation which usually precede important ges. Xor can this be wondered at. For the (*T1 of taxation tends every year to become ea\>ier. And fast though the wealth-producing of the country increases, yet the national arid tlie national rates increase faster still. every heading the cost of governemnt goes and bounds, and no one can sav where So 18 ^°Ss^e t° effectively reduce- it. There are IQany measures of public improvement "which avr»ijt accomplishment that we must be prepared for further increase in public expenditure rather than any decrease. Tharefore the only way of lightening the burden of taxation is to find a tie\\> source of revenue. Such a new source of lies at hand in the shape of the value of lalld which has hitherto contributed far less than any personalty to the cost of government. The following table will show at a glance how enor- mously the demands upon the public exchequer have grown within the past thirty years: LooaJ Taxation. 1867. 1892. and Walea £ 23,967,000 £ 47,439,559 Gotland 2,550,000 6,306,492 Ireland 2.740,000 3,651,686 Total je29,257,000 £[;7,897,737 I Imperial Taxation. i 1874. 1884. 1895. ) £74,921.837. £ 88,043,110. E101,974,000 I I In these days of severe business competition this lncr°asing load of taxation is a serious matter to k'gB numbers of people. Thirteen years ago a rating authority, the Vestry of St. Pancraa, Sent a. petition to Parliament on this matter. They showed that they represented a population, of 2^0,000 and a rateable value of £1,513,910. They ^niplained that they experienced a. greater diffi- culty from year to year in raising rates from per- SOns of limited means owing to the increasing pub- lie expenditure of Metropolitan authorities. Dur-* ing the last half-year they had had to summon 5,895 persons before the magistrates for the non- payment of rates. They showed that the rates at present fall most heavily upon the retail trading M'd working classes, and those who benefit most largely by the increased value of land in large towns are exempt from contributions towards local taxation, notwithstanding the fact that such tax- ation is largely expended in increasing the value of the 4nd, especially where streets and other pub- lic improvements have been made at the cost of lhe ratepayers. They concluded their petition with the prayer that the owners of land mgiht be rated. In the same year (1885) the Royal Com- mission on the Housing of the Poor recommended a similar reform. They called attention to the fact that at present land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably pro- ducing a small yearly return until itr is let for building. The owners of this land are rated, not in relation to the real value but to the actual an- nual income. They can thus afford to keep their land out of the market, and to part with only small quantities, so as to raise the price beyond the natural monopoly price which the land would command by its natural advantages of position. Meantime the general expenses of the town on improvements is increasing the value of their pro- perty. If this land were rated at say, 4 per cent. on its selling value, the owners would have a more direct incentive to part with it to those who are desirous of building, and a twofold advantage would result to the community. First, all the valuable property would contribute to the rates, and thus the burden on the occupiers would be diminished by the increase in the rateable property. Secondly, the owners of the building land would be forced to offer their land for sale, and thus their competition with one another would bring down the price of building lan,d and so diminish the tax in the shape of ground rent, or price paid for land, which, is now levied on urban enterprise by the adjacent landowners; a tax, be it remember- ed, which is no recompense for any industry or expenditure on their part, but is the natural re- sult of the industry and activity of the towns- people themselves. Having regard to all these considerations, the Royal Commissioners therefore urged that "these matters should be included in legislation when the law of rating comes to be dealt with by Parliament." Yet, simple and just though that reform is, it has hitherto been with- held. The,efforts of the landlord legislation of the past are thus perpetuated through the supineness of landed taxpayers, who, like the camel, kneel down while they are being loaded. And meantime the day of "the last straw" most unaccountably tarries. The Case for London. Take the case for London. Before the Town Holdings Committee evidence was given by the late William Saunders to the effect that the total value of property for rating purposes througout the Metropolitan area was as follows — Capital value of London land, jB418,000,000 Capital value of London buildings, J3212,000,000 The owners of the JM18,000,000 for land yap no rates, and the only taxation to which they are sub- jected is the income tax and a nominal land tax, the total of both being less than half a million a year. Houses are charged with rates which aver- age (say) 5s 6d in the L, not only upon the annual value of the buildings, but also upon the annual value of the land. In addition to the rates they pay house duty and income tax. In 1863 London paid the rate collector £ 2,719,272. In 1890 this had increased to £ 7,244,067. And this amount is much greater now. So the London case stands thus: Land worth JB418,000,000 pays J3500,000 in ratea. Buildings worth £212,000,000 pay £9,000,000 in rates. Of course what applies to London applies to every other town. The figures will be smaller in other cases, but the inequality and the injustice will be about the same. And as if the urban ratepayer did not have enough to complain of already, he has been lately saddled by the iniquit- ous Agricultural Rating Relief Act of the present Government, with the weight of paying an ex- tra j32,000,000 a year ostensibly fo rthe relief of agricultural tenants, but in reality for the benefit of agricultural landlords. Thus were the landlords revenged for Sir William Harcourt's increase in the estate duties, and the urban voters rewarded for their loyalty to their masters at the 1895 elec- tion. Verily a setting back of the clock. There remains, however, consolation in the knowledge that it is only for a time, if the people can by any chance be made alive to their own interests. Chn the Landlords Shift the Tax? It is necessary here to refer to an important question, about which a curious controversy has raged, "Can the landlord shift a tax on land values back upon the tenant?" If he can, then wherein will the tenant be benefited by the pro- posed change? Adam Smith, Ricardo, Mill, Rog- ers, and in fact all the economists,' agree that a tax on rent stops where it falls. Says John Stuart Mill: "A tax on rent falls wholly on the landlord. There are no means by which he can shift the burden upon anyone else." This argu- ment always pre-supposes that other things remain unchanged. It is quite true that, generally speak- ing, a landlord gets as much for his land as he possibly can. He could not get more for it mere- ly because his household expenses had increased. Whether or not he can shift the tax will be de- termined solely by the way in which it is to be spent. If it be thrown into the sea, or spent on war, or employed for some new purpose, then the landlord cannot recoup himself. But if lie be em- ployed to get a corresponding remission of taxes which the occupier now pays, then the landlord will be able to sweep into his pocket as increased rent a part at least of the whole benefit which the tenant would otherwise wholly receive in reduced taxation. All authorities are agreed that land- lords gain in higher rent what the tenants ought to gain in lower taxation..It remains to be seen how far this tendency will be counterbalanced by the taxation of land values. Henry George in "Progress and Poverty," Book VI, chapter i, says: "A reduction in the amount taken from the aggregate produce of a community I by taxation would simply be equivalent to an increase in the power of net production. It would, in effect, add to the productive power of labour, just as do the increasing density of population and improvement in the arts. And as the advantage in the one case goes, and must go, to the owners of land in j increased rent, so would the advantage in the I other." At any rate, the experiment must be tried, as it would be a. valuable means of cutting down monopoly rents which now obtain because if land being withheld by rich sportsmen or specula- tors. And further, a tax upon land values is the ideal means of raising revenue for new public ex- penditure, thus at least preventing any further taxation of tenants. As a fiscal reform, therefore, I support it. But, both for its inefficiency as well as for its inequity, I am entirely opposed to the policy known as "taxing landlords out."

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