Proposals to levy a special rate in respect of land values in urban districts have been before the public in England and Scotland for several years.

As far as England is concerned, the movement appears to have largely originated in London, and latterly to have been especially identified with the London County Council, who have from time to timeconsidered and discussed the subject.

The proposals necessarily involve a separate valuation of sites, apart from the buildings upon them, and, in the form in which they have been presented, they also involve a system of levying a rate upon "owners" 1 in respect of site values. This rate upon owners might be in addition to, or in lieu of part of, the ordinary rates now imposed upon occupiers. It is suggested that the "owners" rate should be deducted by the lessees from the rent they pay to their lessors. There may be a number of "owners" between the owner of the freehold and the occupying tenant.

The present system is to value, without separation, a building and the land upon which it stands, and then to levy a rate upon the occupier in respect of the annual value of the whole hereditament, leaving the adjustment of the burden to be determined by contract between the parties themselves.

The proposals include the levying of a rate upon owners in respect of unoccupied building land in urban districts, and on land ripe for building on the outskirts, whether unoccupied or used for agricultural purposes.

Costelloe, Vol. II. of Min. of Ev., App. No.XL, par. 25, Fletcher Moulton, Vol. IV. of Min. of Ev., App. No. 10, par. 3. De Bock Porter, Vol. IV. of Min. of Ev., App. No. IX., par. 7. Sargant, Vol. IV. of Min. of Ev., App. No. XL, par. 13. Costelloe, Vol. II. of Ev., App. No. XL, par. 3.

1 "Owners," according to the definition of the London County Council, are "persons deriving a revenue, or use equivalent to revenue, from the value of a site."

R.L.V. B

The suggestion to levy a rate in respect of site values upon all persons in enjoyment of some interest arising out of site value, is of comparatively recent growth. The late Mr. Costelloe, when giving evidence before the Royal Commission on Local Taxation, traced the development of the movement among the members of the London County Council from its first constitution. He said "it was undoubtedly felt at that time as a grievance, that the large ground owners of London were in no way contributing to the very great and growing cost of London administration and improvement, which was being paid out of the pockets of the occupying ratepayers."

The proposal then before the public for dealing with this question was usually referred to as "the taxation of ground rents." Shortly, it was a proposal to put a special tax on the owners of the freehold, with the object of getting some contribution from them in respect of their reversionary interests. It was a tax on a reserved rent which had been agreed to be received free of rates and taxes, which might have no relation to the value of the site at the time it was created, and might, therefore, be no complete indication of the whole bargain between the parties, nor a measure of the value of the reversion. Moreover, this scheme did not deal with persons other than the freeholder, having more immediate and, perhaps, larger interests in site values, and drawing a revenue from them during the continuance of a lease. But, at that time, Mr. Costelloe pointed out, the question "had not been thought out in all its bearings," and the grievance referred to "was a kind of object lesson, which directed attention and stimulated closer inquiry."

Another proposal which had been made for a number of years in England, with the object of obtaining some direct contribution from owners, was the division of rates between owners and occupiers, on the principle existing in Scotland.

Costelloe, Vol. II. of Min. of Ev., App. No. XI., p. 304, par. 3.

But the two proposals - i.e., to rate ground rents, and to divide rates between owners and occupiers - were made with somewhat different objects. The former aimed at securing some present contribution in respect of the increase in the value of sites, due to the expenditure of money derived from rates or from other causes, the latter at throwing upon the lessor some part of the increased burden of rates, which it is suggested could not have been in contemplation at the time of the making of the lease.