Extract from Report, 1885.

"In connexion with any such general consideration of the law of rating, attention would have to be given to the following facts. At present, land available for building in the neighbourhood of our populous centres, though its capital value is very great, is probably producing a small yearly return until it is let for building. The owners of this land are rated, not in relation to the real value, but to the actual annual 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 advantages of position. Meantime, the general expenditure of the town on improvements is increasing the value of their property. 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 two-fold 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 land, 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 remembered which is no recompense for any industry or expenditure on their part, but is the natural result of the industry and activity of the townspeople themselves. Your Majesty's Commissioners would recommend that these matters should be included in legislation when the law of rating comes to be dealt with by Parliament."

Extract from Memorandum by the late Lord Salisbury.

"A recommendation is made in the report that vacant land in towns or in the neighbourhood of towns should be rated on its capital instead of its income value. This paragraph was introduced into the report just before it was signed, and I cannot find that it is based on any evidence laid before the Commission. I believe that the evil results of such a change would outweigh its advantages. There may, possibly, be something to be said for a general recourse to the American system of taxing capital instead of income values; but to adopt it in the isolated case of vacant land in or about towns would not only lead to much evasion but would have injurious sanitary effect. It would operate as a penalty on all open spaces except those belonging to a Public Authority. Urban or suburban gardens would especially suffer. On the other hand, when any pecuniary advantage was to be gained by keeping the land vacant, its capital value could be easily reduced by collusive alienations of portions of it. By a colourable sale of the outside edge, the capital value of an interior block could be, for the time, to a great extent destroyed."

Memorandum by Lord Goschen, in which Lord Cross concurred. "In addition to the reservations which I have made in the joint memorandum of Mr. Lyulph Stanley and myself,

I wish to record my dissent from the recommendation of the Report with reference to the rating of vacant land, an extremely important point, on which no evidence at all proportionate to the magnitude of the subject was placed before the Commission.

"The suggestion involves an entirely new principle in the law of rating, namely, taxation of capital instead of annual value, and I could not concur with such a far-reaching change in the whole system of local taxation without more examination of the bearings of the proposal than the Commission were able to give to them. It is almost certain, too, that if vacant land were rated, the measure would have to be followed by the rating of empty houses. Evasion of the law by the running up of temporary structures would otherwise probably be easy, and there are other considerations which would also contribute to render this further step inevitable. But if that were so, the rating of empty houses would act as a discouragement of that development of building which the rating of vacant land is intended to promote, and the general change would fail in its purpose."