A special additional tax on " site" or land values would be inequitable and cannot be justified either on the ground of ability or benefit.

A general rate on all site value would be in no way proportioned to the increments of value, but would fall also on the sites which have decreased in value.

A further difficulty arises in considering the manner in which existing contracts should be dealt with. We see no justification for allowing existing contracts to be broken for the benefit of occupiers who have not shown that, as between themselves and the owners, those contracts are unjust. Trustees and others have purchased ground rents on the faith of contracts that the occupiers should pay all rates on the properties which secure the ground rents, and all such persons would be injuriously affected by the proposed schemes, for the benefit of occupiers who, through their representatives, incur and control the expenditure which falls on the rates. Other advocates of the special tax proposed have, however, expressed their desire to leave such contracts undisturbed in any manner whatever, the result being that large numbers of owners who have accepted fixed rents for fixed periods, extending to 99 and 999 years, or even in perpetuity, on condition that their lessees shall bear all rates and taxes, would be entirely unaffected by the proposal. The new tax would, in such cases, fall to be borne by the lessees, who are not only already rated to the full extent of the enhanced value of the property, but whose interest in it is often gradually diminishing in value, both by reason of the effluxion of time and the growth of waste and dilapidations. The case of the purchaser of a 99 years' lease of a house, subject to a ground rent, may be cited as a case in point. Large numbers of such leases have been purchased in recent years through the instrumentality of building societies and other provident organisations. The value of the hereditament to the lessee increases but slowly, his capital outlay should be replaced, and the lessor's claim for dilapidations will ultimately fall to be met. It would be difficult in such cases to reconcile the lessee to the justice of imposing upon him a new and special tax, from which the lessor would be exempted by reason of the existence of a contract having still a long term to run, and a particular form of thrift which Parliament has in the past done much to protect and promote would be seriously prejudiced.

Existing contracts present an insoluble difficulty. Breach of contract is indefensible, and on the other hand, a new site value rate falling on occupiers and lessees would be most burdensome and unfair.

To conclude our observations on this branch of the subject committed to us, we would remark that the advocates of what would be in effect a new land tax, to be applied in aid of local expenditure, have failed to convince us that it would be equitable to select a particular class of rateable property for the imposition of a new and special burden. No new tax on land appears to us to be required to meet any special expenditure incurred by Local Authorities for its benefit, nor does land differ so essentially from other property, as regards the alteration of its value from time to time, as to justify it being rated exceptionally. In any case it would, we believe, be impracticable to ascertain what that alteration may be - a problem which must of necessity be solved if the tax is to be of equal incidence : whilst the practical difficulties of ascertaining even the annual value of what is one element only in the value of the rateable hereditament, and of paying due regard to the existence of contracts having either a perpetual existence or a long term of run, constitute, in our judgment, additional reasons against any alteration of our rating system in the direction proposed.

No new tax on land is practicable or equitable.

The following extracts are from the Separate Report on Urban Rating and Site Values: (Signed by Lord Balfour of Burleigh, Lord Kinross, Sir Edward Hamilton, Sir George Murray and Mr. Stuart, M.P.1)